In 2018 the city of Seattle implemented a sugar sweetened beverage tax. The difference with this tax is that it is not actually a sales tax the tax is put directly onto the distributors of the beverages. What this tax does is it makes a distributor pay 1.75 cents per oz of any beverage that they sell within the Seattle city limits (Sweetened). The impact of this tax was that the distributors and sellers of the beverages passed the increase taxes on to the consumers by increasing the in-store prices that that a person on average pays for their sugary drink. The reasoning behind this tax was to increase the health of the Seattle city residents and decrease the amount of sugary beverages that were consumed. There are multiple different health complications including cavities and diabetes that have been linked to an increased consumption of sugary drinks. This tax policy is being used in over 40 countries around the world and then several different cities within the United States (Powell). Looking at data internationally as well as in Seattle the evidence shows a decrease in sales of sugar sweetened beverages especially when it comes to the larger sizes of these beverages where the tax is more pronounced because the tax is done per oz. The study that was done by Powell and Leider show that on average when Seattle who has the beverage tax was compared to Portland who does not have the beverage tax the sales fell by about 20% for beverages that were taxed. When thinking about this keep in mind that not all sweetened beverages are taxed the beverages to in order to be taxed must meet a certain threshold. Over the same time period the study also looked at the amount that each of the beverages went up in cost and the Seattle areas beverages went up more in cost than the Portland ones did by a comparatively significant amount. In actuality the amount was not that much. The beverages that did not have the tax placed on them in Seattle increased over the same time period in sales amount indicating that people were more willing to choose other beverages that did not see the tax and corresponding price increases. There is not enough data at the time of this study to indicate whether cross-border shopping was being affected with the increase in taxes. Looking at other states who have had the sales tax for longer indicate that there is an increase in cross-border shopping for people that truly want their sugary drinks at a reduced cost. This increase in tax revenue is supposed to support healthy food options and access as well as child health readiness and development in schools. Unfortunately, in Washington state all major state tax revenue is deposited into the general fund since Washington is a general fund state and then is allocated from there.
The secondary evaluative criteria of
ethics starts to come into play with this tax because the tax is meant to duce the amount of sugary drinks that people drink on a regular basis in order to increase their health. Where ethics comes into play of this is what role does the federal government have to decide on the health of its citizens. If a person wants to increase their chance of cavities as well as obesity and diabetes that is that person’s right and choice not the federal government or the state government or the local governments to choose for them.
When looking at cross-border shopping the consumer has to weigh the difference of the price of the extra travel time and the costs associated with that versus the cost of just paying the increase for the sugary desire to drink. Looking at the primary evaluative criteria of
effectiveness criteria starts to play in here when looking at cross-border shopping especially when it comes to Seattle specifically. The sweetened beverage tax only applies to the city of Seattle itself not the entire Seattle metropolitan area. Depending on where the residents reside it could be quite easy for them to drive a couple of blocks and be outside of the affected area of the tax and still be able to get the sugary and sweetened drinks at a reduced price thus reducing the overall effectiveness of this tax but still hurting the businesses that it affects.
The
administrative feasibility of the tax as well as the
fairness feasibility of the tax are both quite straightforward. About 4% of the tax revenue goes to the administrative burden and maintaining the tax itself meaning that most of the tax revenue is available to go to the program stated. As far as the criteria for fairness goes, everyone that wants to buy a sugary sweetened beverage in the city of Seattle gets to buy the same exact beverages for the same price. Any distributor that is going to sell within the city of Seattle is going to be subject to the same tax providing their beverages meet that criteria if they don’t want to be subject to that tax they either need to change their beverage so it doesn’t does not meet that criteria or not sell in the city of Seattle. Overall, as far as taxes go this is quite a fair tax there are no different tiers or other levels the different people have to meet.
An alternative or change in order to improve the effectiveness of this tax would be to incorporate more of the Seattle metropolitan area and possibly even the state of Washington instead of just the city of Seattle itself. This would reduce the cross-border purchases of sweetened beverages as well as increase the overall tax revenue. An alternative to this tax when it comes to the ethics criteria dilemma could be to increase education on the risks of drinking an increased amount of sweetened sugary drinks instead of increasing the tax on them to discourage people from drinking them. A dedicated educational campaign to the risks and drawbacks of them has the potential to have a similar effect as the tax but not have the drawbacks of the government in some form influencing the health of their citizens directly in a monetary fashion. Recent studies suggest that having graphic warnings on the packaging as well as an increase in overall education of the risks has a more substantial effect on health and reduction of sugary drink consumption then this type of tax does (Henriquez). The tobacco industry saw the effects of this in both plain packaging and in the education on the risks of smoking with a significant decline in overall smokers within the United States. Another potential solution instead of taxing the drinks is to limit the buy one get one free type of sales that are often done on sugary beverages.
Henriquez, E. (2022, March 7).
Beyond sugar taxes: Alternative approaches to sugar… Euromonitor.
Powell, L. M., & Leider, J. (2021). Impact of a sugar-sweetened beverage tax two-year post-tax implementation in Seattle, Washington, United States.
Journal of Public Health Policy,
42(4), 574–588.
Sweetened beverage tax – seattle.gov. City of Seattle . (2019).