Seattle City Council approves tax on soda, sugary drinks

by: Natasha Chen Updated:

SEATTLE - The Seattle City Council voted 7-1 on Monday to approve a 1.75-cent tax on soda and sugary drinks.

 


What to know:
 
The ordinance passed on a 7-1 vote Monday calls for a tax of 1.75 cents per ounce on major distributors of beverages such as Pepsi and Coca-Cola, sports drinks, energy drinks and other sweetened drinks. Diet drinks were exempted.
Mayor Ed Murray proposed the tax in February as a way to raise millions of dollars for programs to promote healthy eating and help close the learning gap between white and minority students. He revised his plan to add diet drinks after an analysis showed their popularity among wealthy people and white people.
The version that advanced out a council committee Wednesday, however, doesn't include diet drinks. Some critics have called that plan regressive.
Distributors only pay 1 cent per ounce if the manufacturer makes between $2 million and $5 million a year. Those making under $2 million a year are exempt.
Businesses oppose the tax as harmful to the economy and communities. Supporters say it will help cut down on sugar consumption.
 

What supporters say
 
Public health advocates and others cheered after the measure passed. They say it would cut down on the consumption of sugary drinks that have little nutritional value.
 
Judy Simon, a clinical dietitian with University of Washington Medical Center, said there is a link to consumption of sugary drinks and weight. Part of the problem, she said, is that people are drinking more of these drinks. But she said it’s not just the extra calories you have to worry about.
 
“Excess sugar in someone's diet can cause metabolic changes and this could contribute to development of diseases like diabetes and heart disease,” Simon explained.
 
That’s partially why a committee of the city council moved forward on a plan that would tax 1.75 cents per ounce on distributors of sweetened drinks.
 
Distributors only pay 1 cent per ounce if the manufacturer makes between $2 million and $5 million a year. Those making under $2 million a year are exempt.
 
Drinks that are 100 percent fruit or vegetable juice, drinks whose primary ingredient is milk, drinks used for medical purposes, and baby formula are among the beverages exempt from this tax.
 
Taxing sugary drinks could raise between $15 million to $23 million, which would go to educational programs for low income kids.
 
What opponents say
 
Business owners were against the proposal.
 
“This disproportionate tax of 1.75 cents per ounce is going to kill the businesses absolutely,” said a business owner who spoke at the council meeting.
 
Distributors would likely pass the tax on to consumers.
 
Rachel Marshall, who started Rachel’s Ginger Beer, said this tax hurts her business, which falls in the small business category between $2 million and $5 million. While her tax rate would be 1 cent per ounce, that would still cost her six figures.
 
She said because they hand-craft their drinks using fresh juice and high-quality sugar,
“the cost of our product is higher than that of our
 
competitor, so simply raising prices - I’m not sure our market could bear that.”
She said this move will prevent her from growing the business the way she imagined.
Teamsters, who deliver these drinks, worry it could cost them their jobs if people cut back.
 
“This tax threatens to create deep economic insecurities for them and their families and it's not right,” said Pete Lam with Teamsters Local 174.
 
KIRO 7 asked Simon whether hitting people in their pocketbooks works.
 
“It seems like the trend is that consumption is going down,” Simon said. “What I don’t think we have yet is the data of the cause and effect -- are we seeing obesity rates going down?”
Still, Simon said it's a start.
 
“We forget there are other foods that are very high in sugar,” Simon said. “Those would be the coffee drinks like Frappuccinos or snack foods people are eating.”