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The District may approve one of the nation’s highest taxes on sugary drinks

A worker stocks shelves with Coca-Cola products at a Philadelphia supermarket, one of several cities with taxes on sweetened drinks. D.C. lawmakers want the nation’s capital to join their ranks.
A worker stocks shelves with Coca-Cola products at a Philadelphia supermarket, one of several cities with taxes on sweetened drinks. D.C. lawmakers want the nation’s capital to join their ranks. (Matt Rourke/AP)
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A majority of the D.C. Council wants to impose one of the highest taxes on sugary drinks in the nation, driving up the cost of a soda in the capital city.

A bill announced Monday would levy a 1.5 cent-per-ounce excise tax on sweetened beverages, adding one dollar to the price of a two-liter bottle.

The tax applies to sugary drinks with any “natural common sweeteners,” sweeping up beverages such as Ga­tor­ade, sweetened iced coffee and orange juice with added sugar. The bill would not affect diet soda and other drinks with artificial sweeteners, beverages with milk as the primary ingredient, alcohol, and all-natural juices.

The legislation is aimed at improving health in a city where residents in some low-income neighborhoods in Northeast and Southeast struggle with high rates of obesity and diabetes.

“On average, children consume 30 gallons of sugary drinks a year. That’s a bathtub full. It’s a huge health risk,” said council member Brianne K. Nadeau (D-Ward 1), the bill’s author. “We need a little bit of stick in addition to the carrot.”

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San Francisco, Berkeley, Oakland and Albany in the San Francisco Bay area impose similar taxes on distributors, as do Philadelphia, Seattle and Boulder, Colo. Boulder has the highest sugary drink tax at 2 cents per ounce, according to the Tax Policy Center.

The new D.C. bill comes days after the city added an additional 2 percent sales tax on soft drinks. If passed, the excise tax would replace that additional sales tax.

Researchers say a higher sales tax isn’t likely to make customers pick up a bottle of water instead of a Coke because it’s charged at the register, after the customer has already selected the beverage. An excise tax is imposed on distributors, who pass it onto consumers by raising the sticker price of the item.

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“If you want to reduce consumption, the shelf price needs to go up,” said Kristine Madsen, a professor at the University of California at Berkeley School of Public Health who has studied the soda tax. “With a sales tax, it doesn’t change their decision at the moment. They are just paying at the checkout line at that point.”

Her research found sugary drink consumption in Berkeley’s low-income neighborhoods declined in half since the first-in-the-nation excise tax took effect in 2015.

Revenue from the proposed tax increase in the District would be used to fund early-childhood education, a program that provides vouchers for free produce to low-income residents as well as grants for outdoor recreation.

An industry group said those programs should not be funded through a regressive tax that burdens consumers.

“We support the programs and initiatives included in Councilwoman Nadeau’s proposal, but there are better ways to fund them than with a massive tax on working families, small business owners and their employees,” said Ellen Valentino of the D.C. Beverage Association in a prepared statement. “With the District’s record-setting budget surplus — aided by the sales tax increase on beverages effective just last week — another tax on everyday beverages like juices, teas, and sports drinks is not needed.”

The soda industry and other opponents have spent millions fighting soda taxes around the country, calling them unfair to consumers and small businesses. They’ve racked up recent ­successes.

Chicago repealed a soda tax just two months after it took effect. California banned any new sugary drink taxes, and Michigan, Washington state and Arizona passed similar preemption laws.

Another recent study found the deterrent effect of sugary drink taxes can be limited.

Researchers who studied the implementation of the tax in Philadelphia found sales declined by nearly half. But the net decline was closer to 20 percent when taking into account a spike in sales immediately outside city limits.

That issue is salient in the District, where nearby Maryland has no soda excise tax.

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“This could lead to a lot of loss of sales at retailers inside of D.C. and could hinder D.C.’s ability to raise tax revenues if a lot of customers are avoiding the tax that way,” said Anna Tuchman, a marketing professor at the Kellogg School of Management at Northwestern University who studied the Philadelphia tax.

An earlier bill to add an excise tax to soda sales in the District failed in 2010. But advocates say they’re more organized this time and have the experiences of other cities and research to help make their case. Eight of 13 members of the D.C. Council have signed onto the latest tax legislation.

Stuart Anderson, a longtime organizer in Southeast Washington, said sugar consumption is heavy in his community because of relentless advertising, a dearth of grocery stores and low prices.

He’s helping to organize a new group called Don’t Mute Our Health — a reference to the Don’t Mute D.C. movement that formed from a dispute over a store playing loud go-go music in the gentrified Shaw neighborhood.

One of the group’s first campaigns is to discourage sugar consumption, arguing that poor diet is linked to violence and children acting out in school.

“Sugar is the culprit,” Anderson said. “People say, ‘Oh you’re brainwashing us.’ But you’ve been brainwashed, and we are trying to deprogram you.”

In one video, artist Té Speight recites a spoken-word poem decrying disproportionate advertising in black communities.

“So every time we turn on our TV screens, they’ll be sure to advertise it right on our BETs: cheap sugary drinks we can afford with our EBTs,” Speight said.

Nadeau plans to formally introduce the soda tax bill at the council meeting Tuesday with Chairman Phil Mendelson (D), Mary M. Cheh (D-Ward 3), Trayon White Sr. (D-Ward 8), Brandon T. Todd (D-Ward 4), Charles Allen (D-Ward 6), and at-large independents David Grosso and Elissa Silverman.

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