Following in the footsteps of Boulder, Philadelphia, Oakland and San Francisco, Seattle has approved its own version of a job-killing soda tax.
In a 7-1 vote with one councilmember absent, the Seattle City Council passed the tax on soda distributors by an overwhelming margin. The council ultimately agreed on a tax rate of $1.75 per ounce, which translates to about $1.18 for a 2-litre bottle of soda. Unless opponents of the measure succeed in blocking it, the tax will be collected beginning next year, the Seattle Times reported.
A coalition involving restaurant owners, grocery owners and the local chamber of commerce opposed the bill, which was backed by the American Heart Association. One grocery owner was quoted in The Seattle Times discussing how the tax would hurt his business. Husik Harutyunyan, who owns a small grocery store in North Seattle, urged the council to reject the tax. He said his customers may begin buying soda in Shoreline, Wash. if the tax leads him to raise his prices.
“I have to close my store and go find some job,” the 44-year-old told the Seattle Times.
Diet soda won’t be taxed, while baby formula, medicine, weight-loss drinks and 100% fruit juice will also be exempt. Sports drinks like Gatorade, energy drinks like Red Bull and fruit drinks like Sunny D will all be taxed, along with the syrups used in fountain soda. It remains unclear whether the tax will apply to the syrups used in flavored lattes like those served at Starbucks, the Times reported.
The council will use the revenues from the tax – about $15 million a year – to help fund healthful-eating programs like “Fresh Bucks,” which will help people with food stamps buy more healthy food. The council will also disburse funds to soup kitchens and food pantries. Anti-obesity advocates rejoiced after the measure was passed. “It’s a huge win for Seattle,” said Victor Colman, director of the Seattle-based Childhood Obesity Prevention Coalition.
“It’s not a panacea for the problem of childhood obesity, but it’s a huge marker to take this step. Consumption drops will happen, and we’re going to see stronger health in the communities that need this the most.”
The tax, initially proposed by Seattle Mayor Ed Murray, was debated for months after some labor unions warned that the plan would be a burden for entrepreneurs and result in job losses. But luckily for the supermarket employees and teamsters who will lose their jobs because of this tax, the council has set aside some of the revenues for job retraining programs.
As the receipt below shows, a 10 pack of flavored water purchased in Philadelphia carries a 51% beverage tax. And since PA has a sales tax of 6% and Philly already charges another 2%, the total sales tax was 8%. In other words, a purchase which until last year came to $6.47 had overnight become $9.75.
The dramatic price increase led to a 30% to 50% drop in beverage sales, forcing supermarkets and beverage distributors to lay off some staff.