MAJOR RESISTANCE in the seven other countries proposing or adopting taxes on sugar-sweetened drinks has come from the beverage industry. However, it's only in the United States where a prominent progressive voice such as Democratic presidential candidate Bernie Sanders has offered strident opposition. In other countries, such as the United Kingdom, France and Mexico, progressives have promoted these taxes.
The beverage industry and the few progressives who align with it call these taxes "regressive," warning that they that hurt the poor. Regarding Philadelphia's proposed tax on sugary drinks - 3 cents per ounce - which will fund programs that stand to benefit lower-income families the most, this concern is misplaced.
If you pass a sales tax on all food, that is regressive and hurts low-income consumers greater, as they spend a much greater proportion of their income on basic foods. Similarly, for a very addictive item such as cigarettes, the poor often pay a greater proportion of the tax, as they were in the past less likely to reduce their purchasing.
In Pennsylvania, for instance, a sales tax of 6 percent on most goods is leveled equally, whether you make $20,000 a year or $1 million, taking a greater proportion of a lower earner's income. Further, wealthy Pennsylvanians can pay the same percentage in income tax as those who earn minimum wage. The Institute of Taxation and Economic Growth ranks Pennsylvania sixth-worst state in terms of regressive tax policy.
While suggested alternatives to a tax on sugary drinks include increasing taxes for the wealthy to spare the working class, proponents such as Sanders fail to recognize such a move in Pennsylvania would be illegal, as the policy is protected by state constitutional law.
Since January 2014, Mexico has had a 10 percent tax on sugary drinks. An analysis of the differences between sales of sugary drinks before and after the implementation of their excise tax reveals valuable insight that should be considered in the case of Philadelphia. In Mexico, where rates of obesity and diabetes are among the highest in the world (and equal those of Philadelphia, except Philadelphia has more extremely overweight citizens, mainly in lower-income subpopulations) overall sales of sugary drinks decreased by 12 percent by the 12th month of the new tax.
But the decrease in sales from low-income consumers was more than 17 percent by the 12th month of the tax, while those in the higher income brackets changed a statistically insignificant amount. Thus our research has found that indeed more tax was paid by higher-income Mexicans, while the poor, who continue to buy the drinks, purchase fewer of them.
Over the same time, sales of untaxed beverages (mostly bottled water) increased 4 percent, and in yet-unpublished work, we know the poor increased water purchases by a much greater amount. In other work under journal review, we show the highest sugary beverage consumers, particularly among the poor, reduce intake the most.
As opposed to the taxes on cigarettes and alcohol, consumers have an increasingly wide array of drink alternatives, including diet sodas and unsweetened beverages.
Pennsylvania has an inherently regressive tax structure enshrined in its constitution, and its inequity has been discussed and grappled with for years, without any progress. The disproportionate tax burden the state's poorest currently shoulder might never be addressed.
In actuality, enacting a soda tax in Philadelphia might very well turn out to be one of the most equitable taxes in the commonwealth. Advocates of fair taxation ought to train their sites on extant taxes that currently penalize the poor and benefit the rich.
This is particularly the case when progressive Philadelphians learn that most of the untreated or poorly managed diabetes, heart disease and other health problems linked with excessive sugary beverage intake are found among lower-income individuals. In Philadelphia, this means the poor would gain from the revenue of the tax, and their health also would increase.
Barry M. Popkin is an economist and
the W. R. Kenan Distinguished Professor