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Update, 3:10 p.m.
A new study on Berkeley, California’s sugary drinks tax dropped this afternoon, and there’s good news for proponents of Philadelphia’s controversial tax.
The report, conducted by the pro-soda tax Public Health Institute and the University of North Carolina, found for the most part Berkeley’s one-cent tax was passed through to consumers, reducing purchases of sugary beverages by about 10 percent after one year of the tax and increasing purchases of untaxed drinks by about 4 percent. And despite being passed through to consumers, the researchers found no evidence of higher grocery bills for shoppers or lower sales totals for stores.
Those details would be welcoming for Philadelphia city officials and other tax proponents. Unlike in Berkeley, which passed with a primary goal of decreased consumption, Philadelphia passed its 1.5 cents-per-ounce soda tax to earn revenue for pre-K and recreation centers. To an extent, it needs consumers to continue purchasing sugary drinks. In the first month of the tax, in January, sales declined about 40 percent based on what would be expected by historical consumption averages in Philly and about 33 percent the next month. The Mayor’s Office has said it doesn’t expect a drop-off of more than 27 percent.
City officials have also stressed that local businesses won’t be significantly impacted by the tax. Independent grocery stores have talked about 10 percent overall revenue losses since the tax was passed in January.
The researchers got their information by collecting 15.5 million transactions from scanner data from 26 stores. But there were some limitations.
The researchers noted that despite reaching out to several grocery and corner stores, the 26 stores for which they were able to get scanner data were mostly big chains. They did not get much information from independent stores and corner stores and noted that corner stores, which they found less likely to pass the tax onto consumers, “may not have reliable records on their sales.”
Berkeley is also different because the city was drinking only 34 percent of the national average for sugary beverages pre-tax. The researchers suggest purchases could go down by much more than 10 percent in cities with higher taxes and a higher average consumption of sugary drinks, like Philly.
“Berkeley’s per capita SSB consumption is significantly lower than the country as a whole,” said Shu Wen Ng, a North Carolina research associate professor of nutrition and co-first author on the study, in a release. “This suggests we will see a much larger tax impact in other U.S. cities with similar or higher tax levels.”
Noting it’s difficult to make comparisons between Berkeley and Philly, Philadelphians For a Fair Future, a PAC affiliated with Mayor Jim Kenney, said it was encouraged by the results.
“Consumer behavior did modify slightly which has a clear health benefit, but not in a way that had a negative impact on projected revenue targets of the tax,” she said in a statement. “For Berkeley, the tax is working as planned. We look forward to similar results in Philadelphia.”
Anthony Campisi, spokesperson for the anti-soda tax coalition Ax The Bev Tax, brought up discrepancies between Berkeley and Philadelphia but added, “confirms our experience in Philadelphia that retailers would be forced to pass this tax onto consumers.”
City commerce director Harold Epps said in a release the study “offers encouraging scientific evidence of what we can expect to see here.”