Seattle Hits Soda Makers with Hefty Sugar Tax

The measure, signed by Mayor Ed Murray on Tuesday, was passed by a 7-1 vote despite aggressive lobbying from the American Beverage Association.

SEATTLE -- On Monday, the City Council of Seattle became the latest to issue a new tax specifically related to sodas and other sugary beverages sold to consumers. As governments increase their initiatives to tackle the mounting cost of public health, sweetened soda has been targeted as a major contributor to the American obesity and diabetes epidemic.

Also read, Philadelphia's soda tax revenue slips to $6.5M in April.

The measure, signed by Mayor Ed Murray on Tuesday, was passed by a 7-1 vote despite aggressive lobbying from the American Beverage Association, which claimed the new tax would hurt poor and working-class families, along with small businesses. Proponents of the tax said it would help the city provide better access to nutritious foods in low-income neighborhoods and communities of color, reports the Seattle Times.

Soft Drink Sales Dry Up Under New Laws
The legislation’s enactment will add Washington’s largest city to a growing list of localities across the country seeking to curb consumption of high-calorie, sugar-filled beverages by passing higher costs on to consumers. Philadelphia, San Francisco (and some of its Bay Area neighbors), Boulder, Colo., and localities in the greater Chicago area have all passed similar measures over the past few years.

The new Seattle legislation will lift the price of a 12-ounce can of sweetened soda by about $0.21 and add around $1.18 to the cost of a 2-liter bottle, based on a rate of 1.75 cents per ounce, which means the tax would be about $1.18 for a 2-liter bottle of soda. One hundred percent fruit juices and zero-calorie drinks are exempted, along with dairy-based beverages. However, it is unclear whether Seattle-based Starbucks Corp.’s syrups will be effected.

Beverage giants such as PepsiCo Inc indicates related laws have carved out a significant slice of their businesses. Berkeley, Calif., reported purchases of sugary beverages in the city were down 10% in the first year of having a soda tax.

SOURCE Shoshanna Delventhal, Investopedia