An early review of the penny-per-ounce soda tax in Berkeley, California, approved by voters last year, says that it has not raised soda prices as much as expected, says Civil Eats. In fact, prices rose by less than half of the expected amount and for some drinks, less than a quarter, according to economists John Cawley of Cornell-Iowa and David Frisvold of the University of Iowa. “This is important because the point of the tax was to make sugar-sweetened beverages more expensive so consumers would buy, and drink, less of them,” Cawley said in a release, but the tax was not being passed through to consumers.
Health economist Shu Wen Ng of U-North Carolina told Civil Eats that retailers may be absorbing the tax themselves out of fear of losing customers to stores in neighboring towns. About 117,000 people live in Berkeley out of a Bay Area population of 837,000. A majority of Berkeleyites say they don’t drink soda or sugary beverages, while most Americans drink at least one sugary beverage a day. The comparatively small number of Berkeley residents who drink sugary beverages may make it hard to discern the impact of the tax. Also, consumption patterns are seasonal, with more soda consumed during warm weather.
Ng and her colleagues are partway through a year-long study of the Berkeley tax. She says a least one year of data is needed before drawing conclusion, said Civil Eats. NYU nutrition professor Marion Nestle says the tax is a winner on another count. It is generating money for school gardening and cooking programs. Some $250,000 was allotted for the programs in June, said Berkeleyside. The referendum set goals of reducing consumption of sugar-sweetened beverages with tax revenue devoted to programs “to further reduce consumption of sugar-sweetened beverages and address the consequences of such consumption.”