April 18, 2017
While the impact of the recently-enacted sugary beverage tax on Philadelphia has yet to be determined, a new study on a similar policy in a California city offers promising signs.
On Tuesday, the Public Health Institute and the University of North Carolina jointly published the academic study on the economic impact of the new law in Berkeley, Calif. The research was supported by former New York City Mayor Michael Bloomberg, who donated significant financial support to numerous efforts - including Philly - to enact sugary-drinks taxes.
The report examined the first year of Berkeley's law, which levied a tax of one cent per fluid ounce on sugary drinks. The government brought in $1.4 million in revenue from the tax.
“The Berkeley tax is a home run—residents chose healthier options, it raised revenue for promoting health, and we saw no evidence of higher grocery bills for consumers or harm to local business revenue,” said Dr. Lynn Silver, the study's lead author.
According to the figures, sales of sugary drinks fell by 9.6 percent in Berkeley and rose six percent in surrounding areas without a tax.
Despite the sharp decrease, consumers bought more amounts of beverages. Purchases of water went up by 15.6 percent and other untaxed drinks increased by 4.4 percent.
When looking at store revenues and consumer grocery bills, both numbers dipped slightly. However, stores in Berkeley fared better than stores in surrounding areas. Average store revenue per transaction dropped 36 cents in Berkeley compared to a 54-cent dip in non-Berkeley stores. The figures indicate the "average grocery checkout bill did not increase at these stores - counter to claims by the soda industry that the policy would be a 'grocery tax,'" the study said.
The report was welcomed by officials in Philly where a 1.5-cents-per-ounce tax was enacted. The revenue will be used to support schools, a universal pre-Kindergarten program, recreation centers, and health initiatives.
"With so many anecdotal and often unverified claims being pushed around by opponents of the Philadelphia Beverage Tax, this study offers encouraging scientific evidence of what we can expect to see here," said Harold Epps, the city's commerce director.
Dr. Tom Farley, the city health commissioner, noted that the tax could also lower the rate of deaths from diabetes in Philly. The disease kills about 350 residents and contributes to an additional 1,000 deaths.
“I am very encouraged by the study and I am optimistic that we will see a similar impact here, Farley said. "Any reduction in the consumption of sugary drinks is an added benefit of the proposed tax. In Philadelphia, we face a severe health crisis with our twin epidemics of obesity and diabetes, and sugary drinks are the biggest single contributor."
To compile the study, researchers collected 15.5 million supermarket checkouts at 26 stores, including three in Berkeley and six in nearby cities. A telephone survey of 957 Berkeley residents was also conducted.
Critics of the tax weren't as optimistic that the impact on Berkeley's economy would translate to a major city like Philly.
Anthony Campisi, a spokesman for the Ax the Philly Bev Tax coalition, pointed to serious questions raised by the study:
"Philadelphia isn't Berkeley. Philadelphia struggles with the highest poverty rate of any big city in the United States. Berkeley is a small city in one of the wealthiest parts of the country. Berkeley's tax also covers many fewer products, and is smaller, than Philadelphia's tax. That said, the study confirms our experience in Philadelphia that retailers would be forced to pass this tax onto consumers and that families would begin shopping outside the city to avoid paying more.
"It also raises serious questions about any putative public health benefits of a beverage tax. The 6 calorie per day decline from taxed products the study found was much more than offset by the 32 calorie per day increase in non-taxed products, including milk and things like yogurt smoothies."
Researchers also warned that Berkeley's average consumption of sugary beverages is significantly lower than the country as a whole.
“This suggests we will see a much larger tax impact in other U.S. cities with similar or higher tax levels,” said Dr. Shu Wen Ng.
Last October, a Pew poll revealed that 54 percent of Philly residents supported the soda tax.