San Francisco guzzles about 3 billion ounces of soda and other sugary beverages annually, but if a 2-cents-per-ounce tax on those drinks is approved by city voters in November, consumption could decrease by as much as 31 percent, according to a City Controller's Office report. The levy could also generate up to $54 million in revenue.
The analysis by the city controller's economist, Ted Egan, is the latest data being used by proponents of the soda tax who have previously drawn from studies on diabetes and obesity and their links to beverages with high concentrations of sugar.
On Wednesday, San Francisco moved a step closer in making history by becoming the first U.S. city to adopt a soda tax when the Board of Supervisors Budget and Finance Committee approved the tax measure. The full board is expected to vote Tuesday to place it on the Nov. 4 ballot.
If approved by two-thirds of voters, the initiative would levy 2 cents per ounce of sugar-sweetened beverages like soda — those that are non-alcoholic, nondiet beverages with caloric sweeteners and contain more than 25 calories per 12 ounces.
San Francisco may not be alone locally in targeting the sugary drinks, as Berkeley voters will be voting on a 1-cent soda tax. Soda tax efforts in the United States have been bolstered by Mexico's 8-cent tax per liter of soda that went into effect this year.
The American Beverage Association, which fought an effort in New York City, is opposing San Francisco's tax proposal and launched a campaign using The City's affordability crisis as an argument against increasing consumer costs. The controller's report estimates that sugar-sweetened beverages account for about 3 percent of sales for food retailers and restaurants. A reduction in sale of these products “is therefore unlikely to substantially reduce retailer margins,” the report said, also noting that other products could be sold in place of the sugary drinks.
The report also predicted that between 80 and 100 percent of the tax would be passed on to soda-buying customers, not spread out across other items. The soda tax would represent a retail price increase between 22 and 36 percent.
“Given this price increase, we estimate that the proposed tax could generate revenue ranging from
$35 million to $54 million per year and could reduce consumption of sugar-sweetened beverages by up to 31 percent,” said the report, which estimated that between 2.6 and 3.2 billion ounces of sugar-sweetened beverages are consumed in San Francisco each year.
Revenue from the city tax would go toward public schools, Recreation and Park and Public Health departments, and nonprofits to support physical activities, nutrition and education.