Seattle soda tax: Doing good or do-gooderism?

Seattle and taxes go together like peas and carrots. Just about every special tax levy to go before Seattle voters in recent years has passed: the low-income housing levy, a Seattle schools levy, the ST3 package, the Prop. 1 Metro bus levy, parks, city streets, and more.

This year, Seattle is considering a city income tax, a soda tax, and the county’s special arts levy.

With all that, its May Day and WTO riot reputation, and with a twice-elected Socialist activist on the city council, it’s no wonder some refer to Seattle as San Francisco North.

Sin taxes can be alright
Mayor Ed Murray, who announced this week that he won’t run for re-election, proposed a soda tax earlier this year, now adjusted to 1.75 cents per ounce. That works out to an additional 21 cents per can, or $5.04 in new taxes per case. The proposed tax is estimated to bring in $23 million a year, mostly earmarked to programs for kids.

Advocates, including former New York City mayor Michael Bloomberg, have pushed soda taxes in cities such as San Francisco, Boulder, Colorado, and Oakland. Debate has raged over job losses caused by Philadelphia’s new soda tax. Santa Fe voters recently rejected a proposal similar to Seattle’s.

I support some targeted “sin taxes.” They can be a good way to lower rates of activities that are expensive for society. With chronic diabetes eating up a big share of health spending (including Medicare and Medicaid spending), our country could certainly benefit from reduced sugar consumption. Beverages are a large source of that.

Even sugar in Seattle has a social equity angle
But that’s a simple narrative, and nothing in Seattle can be simple. Murray cited the CDC in saying that soda taxes are “the single most effective remedy to reverse the obesity epidemic” while noting that his tax proposal would “fund programs important to the health and success of so many of our underserved students of color.”

Murray’s tax was targeted at the problematic sugary beverages, but an analysis by one city councilmember showed “disparate impacts the tax could have on people with low incomes and on people of color,” as the Seattle Times put it. “After Murray’s initial announcement, some suggested the exclusion of beverages with artificial sweeteners would be unfair because affluent white people tend to consume more diet drinks.”

In a city where “equity” is the word du jour, that would be unacceptable. Even though the tax was justified on concerns about sugar, Murray now wants to extend it to diet sodas because…well, because social justice, that’s why.

The political reality is, Murray’s soda tax had an optics problem. It looked like a proposal to help the underprivileged by taxing the underprivileged.

The heads of many minority-owned businesses feel they are being asked to bear the brunt of the tax through lost business. The CEO of Ezell’s Famous Chicken said, “Why would our City Council want to proceed with a massive tax on our diverse small business community and our city’s low-income families?” Labor remains opposed as well, with Teamsters speaking out against soda taxes as harmful to their members.

Especially with sin taxes, the justification is as important as the details. To apply this tax to diet soda might enhance “equity,” but it undermines the purpose of the tax and makes it look more like what it probably is: another money grab for an ever-expanding Seattle city government.

Of course, the perception problem goes much farther than that. The Washington Policy Center points out that under this proposal, Seattle’s soda tax would be eight times higher than the state beer tax. The tax also seems disparate considering some of Seattle’s other proposals. A friend suggested a new city slogan on Facebook: “Seattle: where they tax soda ‘cuz its dangerous, but want to create safe injection sites for heroin.”
-Rob McKenna

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Rob McKenna
Rob served two terms as Washington’s Attorney General, from 2005 to 2013. He successfully argued three cases before the U.S. Supreme Court and negotiated three of the largest consumer financial protection settlements in national history, all involving mortgage lending and servicing. He is a recognized leader in the development of consumer protections on the internet, in data protection and privacy regulation.