The Stew BLOG

Sugar-Sweetened Beverage Taxes: Tying Revenue to Population Health Sweetens the Deal for Communities

Katherine Wright, Associate Director, Stewardship Practice | 02/24/2017

For decades, Americans have been highly suspicious of special-purpose taxes. Our “anti-tax fervor” (that’s actually a thing) has contributed to beliefs that special-purpose taxes of any sort will: (1) prevent being flexible with revenue when public priorities change; (2) create more entrenched bureaucracies; (3) promote wasteful spending; and (4) increase social inequities.

Yet, in the last election cycle, several cities and counties were able to alleviate the public’s fears and pass sugar-sweetened beverage (SSB) taxes on drinks with caloric sweeteners added by the manufacturer or bottler. Marion Nestle, a professor of nutrition at New York University, said in Grist, “Oh, they’re spreading everywhere. And you kill two birds with one stone: you make your population healthier and you get revenue. Hard to argue with that.”

Indeed, these types of taxes are a win-win. First, they are a source of revenue, which cities and counties can direct to public health initiatives. Second, they’ve been associated with reduced public consumption, and can therefore reduce risk for chronic diseases.

In her #FinanceFriday blog a few weeks ago, Stacy Becker suggested that if an SSB tax is being considered in your area, why not work with your community’s multi-sector partnership to get out on the front end of the discussion about how the revenue ought to be spent, and secure it for population health? Passing an SSB tax, and tying it to population health, will not be an easy process. But it can be done.

Let’s take a look at some success stories to see what we can learn:

San Francisco, Oakland, and Albany, CA & Boulder, CO

The American Beverage Association–together with soft drink companies–spent $38 million in 2016 to defeat proposed taxes in four cities: San Francisco, Oakland, and Albany, CA and Boulder, CO. They argued that taxes are “an unfair nanny-state measure that are bad for business and impose a disproportionate burden on the poor.” Such direct opposition to these taxes certainly made them more difficult and expensive to pass, but they passed in all four cities nonetheless. Leaders from community partnerships such as Healthy Boulder Kids and the “Vote Yes on V” campaign in San Francisco as well as individuals, like former New York City Mayor Michael R. Bloomberg, were relentless in promoting the benefits of reducing SSB consumption. They also secured endorsements from parent groups and medical professionals. Efforts like these ultimately convinced the public that the benefits outweighed (or at least offset) the costs.

Cook County, IL

Cook County passed an SSB tax in November 2016 specifically to create revenue that would offset cuts in funding for public health and public safety. Frank Shufta, director of communications in the President of Cook County Board of Commissioner’s office, said that clearly articulating why the revenue was “needed to maintain crucial public safety and public health services for County residents,” and how it would double the County’s investment in community-based anti-violence efforts, was crucial to getting public support. With this focus on transparency regarding how tax revenues would be used, Cook County helped bypass concerns related to wasteful spending in passing this SSB tax. Concerns about misuse of revenue were also alleviated when the Board partnered with advocates from the American Heart Association and other organizations that helped the Board and residents understand “the positive health impacts the SSB tax promotes.”

Philadelphia, PA

In June 2016, the City of Philadelphia passed an SSB tax estimated to raise $400 million over five years to fund universal preschool and “renovations to local libraries, parks, and recreation centers.” In pitching the tax, Mayor Jim Kenney took an unusual approach in order to reduce political entrenchment by focusing on the “giant pot of money” (as this New York Times article put it) that could be used to fund city projects and fill government coffers. In addition, in negotiations over the tax, city council members were able to earmark projects for their communities. These included programs for homelessness, support for cultural institutions, and employee benefits.

Berkeley, CA

In January 2014, Berkeley residents approved a distribution  tax on SSBs (one cent, or $0.01, per fluid ounce on the privilege of distributing sugar-sweetened beverage products in the city). Advocates opted to pursue a distribution tax because it required only a simple majority to pass, compared to a special tax, which requires a supermajority vote for approval. To channel the revenue toward population health, the tax ballot measure also created a panel of experts to advise the city council on how and to what extent the city should establish and/or fund programs “to reduce the consumption of sugar-sweetened beverages in Berkeley and to address the effect of such consumption.” In January 2017, the city council approved $1.5 million dollars of that revenue, now in the city’s general fund, to pay for school nutrition programs and grants to limit the impact of SSBs. Also, since distributors passed the costs along to consumers, there has been a 20% reduction in the consumption of SSBs, according to a University of California, Berkeley School of Public Health study.

Santa Fe, NM

In Santa Fe, Mayor Javier Gonzales and city council members have proposed an SSB tax to be voted on this year. Revenues would fund early childhood education programs that could allow 1,200 more 3- and 4-year-olds to attend school at no cost to their families. The Mayor’s proposal would place tax receipts into a grant fund for early childhood education centers and would appoint an early childhood development commission that would, not unlike in Berkeley, oversee and allocate the money. To date, the community is mostly in support of the SSB. In February 2017, the proposal was endorsed by a pivotal city committee, which enables the initiative to move forward to public comment.

So what do these stories suggest about how your multi-sector partnership might sweeten the deal for your own community? Here are some thoughts:

  • SSB taxes are becoming more popular, and seem to be more supported, when the revenue uses are transparent. Take notice, and if your community is considering an SSB tax, your partnership might want to consider making a case for where the revenue will be spent. If your partnership doesn’t, the revenue could easily be designated for something other than population health.
  • Partner with trusted community organizations and multi-sector stakeholders, especially in government, who can help your community partnership articulate the need for population health funding that will address community needs such as public health infrastructure, education programming, or public safety.
  • Set up credible decision-making and accountability processes in the SSB proposal, such as a panel of community experts in population health who will ensure that the revenue will be spent on public health priorities.
  • Do your homework and set-up a campaign to publicize the value of the investment to the public. Use research demonstrating the positive impact of SSB taxes on population health, such as the health benefits or reduction in healthcare costs.

How can YOU get out front as your community, county, or state considers passing an SSB tax and help ensure the revenue would be spent on much needed population health initiatives? What do YOU think it would take for your multi-sector partnership to sweeten the deal in your community?


Follow Katherine Wright and ReThink Health on Twitter: @kwrigh02  @ReThinkHealth