4 Developments in Sugary-Drink Taxes

CHARLESTON, W.Va. -- West Virginia Gov. Jim Justice may lean on a sugary-drink tax in an effort to reduce previous proposals to increase overall sales and gasoline taxes.

Justice on Feb. 27 proposed a 1-cent-per-ounce tax on sugary soft drinks to raise $85 million a year for the state, as well as a 50-cent-per-pack increase on cigarette taxes to raise another $47.8 million.

The tax would not apply to sugar-free beverages and would not change the existing 1-cent soft-drink tax that helps support the West Virginia University School of Medicine, according to a report in the Charleston Gazette-Mail.

It's just the latest development in a growing trend of beverage taxes, including some reports that suggest they can have a devastating effect on store sales. Here's a look a what else is happening in this area ...

City leaders in Seattle have proposed a 2-cents-per-ounce tax on sugary drinks to raise up to $16 million to help the city's poorest residents, specifically through education, and to encourage consumers to make healthier choices, reducing obesity and diabetes in the city, according to KING5 News.

In Philadelphia, which in June 2016 became the first major city to enact a tax on soda, supermarkets and distributors are reporting a 30% to 50% drop in beverage sales, according to a report in the Philadelphia Inquirer.

“People are seeing sales decline larger than anything they’ve seen up to this point in the city,” Alex Baloga, vice president of external relations for the Pennsylvania Food Merchants Association, told the newspaper.

The city adopted the 1.5-cent-per-ounce tax on sugar-sweetened and diet beverages in an effort to raise up to $92 million per year to fund education programs; the tax went into effect Jan. 1, 2017.

Jeff Brown, CEO of Brown's Super Stores, which manages six ShopRite grocery stores in the city, said beverage sales were down 50 percent from Jan. 1 to Feb. 17 compared with the same period in 2016, according to the report. More concerning, he said, is a 15% dip in overall sales at city stores.

“People didn’t change what they drink," Brown said. "They changed where they’re buying it.”

In Mexico, where a 1-peso-per-liter (about 6 cents U.S.) tax on sugary drinks was imposed in 2014, the tax also seems to have reduced consumption.

A study published in the journal Health Affairs found that purchases of taxed beverages decreased 5.5% in 2014 and 9.7% in 2015.

"Purchases of taxed sodas declined much less than purchases of nonsoda sugar-sweetened beverages during our study period," according to the report. "Given the large variation in prices of sodas, consumers might have shifted to cheaper versions."

Sales of untaxed beverages, such as bottled water and zero-sugar carbonated soft drinks, grew 2.1% during the two-year period.