D.C. Soda Tax Could Give Taxpayers A Nasty Toothache | Citizens Against Government Waste

D.C. Soda Tax Could Give Taxpayers A Nasty Toothache

The WasteWatcher

The D.C. City Council could approve one of the highest soda taxes in the nation.

On October 7, 2019, D.C. Councilmember Brianne Nadeau (D-Ward 1) introduced the Healthy Beverage Choices Act, which would place a 1.5 cent-per-ounce excise tax on sweetened beverages.  The tax would be the third highest in the country, after Seattle, Washington and Boulder, Colorado, which levy a 1.75 and 2 cent-per-ounce tax respectively.

If such a bill were enacted, the price of a two-liter bottle of soda in D.C. would increase by a dollar.  The legislation does not stop at soda;  it would also apply to any beverage with “natural common sweeteners,” including drinks such as “Gatorade, sweetened ice coffee and orange juice with added sugar.”

The supposed goal of this bill is to improve municipal health, particularly in poorer areas.  But, if the experiences of other jurisdictions are any indication, any tax revenues that are generated frequently fail to go to the programs they are intended to fund.  This was the case in Seattle, where in 2017, the city imposed a soda tax to fund “job training programs, initiatives aimed at closing the food gap, and support programs for at-risk children.”  While the cost of a case Gatorade increased by 64.7 percent, the nearly $6 million in revenue generated by the tax was simply dumped into the general fund.

Philadelphia’s soda tax, enacted in 2016, also failed to produce its promised results.  A Stanford University report found that the City of Brotherly Love’s beverage tax was “ineffective at reducing consumption of unhealthy products” and instead of choosing alternative beverages, individuals repeatedly chose to travel to neighboring municipalities to obtain the sugary drinks they wanted at a lower cost.  While soda sales decreased in the city, areas outside the city limits grew significantly. 

A soda tax does not prevent people from drinking what they want. It only incentivizes individuals to purchase their drinks elsewhere, hurting the local economy, particularly lower-income jobs.  The burden ends up falling directly on the shoulders of the low-income families the measure purports to help.  The D.C. City Council should remember that neighboring states Maryland and Virginia have no such excise tax.

Rather than doubling down on the well-documented failures of Philadelphia and Seattle, D.C. should look to the examples of recent cities and states that have removed or banned new soda taxes.  In Cook County, Illinois, the soda tax was so unpopular that it was repealed by a vote of 15-1 only a couple of months after its implementation.  In a state with four municipal sweetened beverage taxes and more than $6.2 billion in new tax proposals in 2019, California has barred the introduction of any new soda taxes until 2030.  Arizona, Michigan, and Washington have followed suit, choosing to eliminate the option to tax sugary drinks even before the food police put the proposals on the table.

In a city that imposes one of the highest income tax rates in the country, the last thing D.C. taxpayers need is another massive cash grab.  The D.C. City Council seems poised to ignore the well-documented failures of similar taxes across the country and follow in their misguided footsteps.

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