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Friday, August 26, 2016

Opinion: Would a Soda Tax Be a Bad Idea For Richmond?

Posted By on Fri, Aug 26, 2016 at 2:41 PM

A soda tax is always controversial. I included a link to an article on Vox in my Wednesday newsletter, the Bite. Vox’s title characterized the 1-cent-per-ounce tax that Berkeley, California, levies as tiny -- and so did I. There were objections, so I thought I’d drill down on the numbers.

A reader notes that if you calculate the tax on a 12-pack of 12-ounce Cokes, you’d see an almost 50-percent increase in the cost of those sodas.

Here’s how it works: A 12-pack of Coke at Wal-Mart costs $3.33 -- that’s around 2 cents per ounce. With the soda tax added, the multipack comes to $4.77 total, or about 3 cents an ounce. That seems like a big jump in price -- because it is.

But individual, 12-ounce cans are around $1.19. That’s about 10 cents per ounce. With the tax, it would cost an extra 15 cents per bottle, equaling $1.64. That's only a 10-percent increase, roughly.

To sum it up: An individual can of soda will cost 14 cents an ounce with the tax and $1.64 total, while a multipack of Coke will cost 3 cents an ounce and around 40 cents a can. (I rounded up the numbers.)

Obviously, buying in bulk is the better deal, whether or not there’s a soda tax.

But taxing soda isn’t about raising revenue for a locality. It's a strategy to curb sugar intake and obesity. Although it’s a complicated problem, as my reader acknowledges, the Vox article notes that since the tax was implemented in 2015, soda consumption has decreased 21 percent while water consumption has risen 61 percent. Although these are preliminary numbers, the story emphasizes, they’re compelling.

And remember, the loudest protesters of the tax are large soda companies. They may be upset that prices would go up, but if you look at the profits of Coca-Cola, which made $44 billion last year, and Pepsi, which came in at more than $18 billion, the big companies are doing just fine. They’ve also raised prices already by making packaging smaller so that they can charge more for less soda -- this despite soda taxes getting little traction in the United States.

Much of the obesity epidemic is concentrated in a section of the population living below the poverty line. Because most people in this group are stranded in food deserts and must rely on convenience stores, the grab-and-go model of single-bottle purchases is more common. Those who buy in bulk usually have easier access to grocery stores.

I have my own qualms about the “nanny state” that so many descry. But the cost of obesity and the stress it puts on the health care system is troubling.

And remember, we’re talking about soda here, people. Soda -- not milk, eggs or bread, but a heavily marketed product that costs pennies to produce and is full of empty calories. The profit margin is enormous. It seems to me that perhaps those above the poverty line could fork out a little more for a product that no one needs to drink anyway to help curb obesity in the overall population.

It may turn out that in the long run the tax experiment doesn’t work -- but shouldn’t we at least try something?

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