Could Taxing Soda Create Jobs?

New research suggests that slighted soda drinkers would actually boost employment by spending their cash elsewhere.

NEW YORK, NY - OCTOBER 17: Lori Middleton drinks a large soda on October 17, 2013 in the Brooklyn borough of New York City. New York's Court of Appeal has agreed to hear New York City's appeal of a lower court ruling that blocked Mayor Michael Bloomberg's campaign to stop fast food restaurants from selling super-sized, sugary drinks. In a recent ruling, which dealt a blow to the campaign to improve the health of New Yorkers, the lower court said the city Board of Health exceeded its authority by putting a 16-ounce size limit on high-calorie sodas and soft drinks. 
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Clara Ritger
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Clara Ritger
Feb. 13, 2014, 11:13 a.m.

Tax­ing soda and oth­er sug­ar-rich drinks—a meas­ure law­makers and voters have weighed to com­bat the na­tion’s grow­ing obesity epi­dem­ic—would have no neg­at­ive ef­fect on jobs, a study finds.

Re­search­ers at the Uni­versity of Illinois (Chica­go) found that a 20 per­cent in­crease on the price of sug­ar-sweetened bever­ages would have an over­all pos­it­ive im­pact on the labor mar­ket.

The Amer­ic­an Bever­age As­so­ci­ation has long pushed back against such a tar­iff on the price of soda, ar­guing that the de­creased de­mand for the drinks would cause job losses in the in­dustry. But the new study eval­u­ates the over­all job mar­ket, in­clud­ing the ef­fect on jobs in the non-sug­ary-drink sec­tor as well as the ad­ded po­s­i­tions in state and loc­al gov­ern­ments that res­ult from the new rev­en­ue. The study finds that the em­ploy­ment gains in oth­er sec­tors of the eco­nomy far out­weigh the job losses for soda makers.

“People who don’t spend a dol­lar on a sug­ar-sweetened bever­age still have that dol­lar to spend else­where,” said Lisa Pow­ell, the study’s primary au­thor and a pro­fess­or at UIC.

That dol­lar could go to sup­port the fruit-juice in­dustry and the milk and dairy in­dustry, or it could go back to the bank. But that dol­lar is still a dol­lar to be spent, along with the ad­ded rev­en­ue from the sug­ar-sweetened bever­age tax, a factor that was not taken in­to ac­count by stud­ies re­leased by the Amer­ic­an Bever­age As­so­ci­ation, Pow­ell said. While soda makers may face job losses, per­haps a truck driver be­gins to trans­port milk due to the new in­creased de­mand from the soda tax, she said.

When asked for a com­ment, ABA re­it­er­ated its ori­gin­al find­ings about job losses in the bever­age in­dustry, and ad­ded that taxes on sug­ary drinks have not garnered the sup­port of voters na­tion­wide.

“Amer­ic­ans have made it clear they don’t sup­port taxes and oth­er re­stric­tions on com­mon gro­cery items, like soft drinks,” said ABA spokes­man Chris Gindles­per­ger in an email. “Soda taxes have un­in­ten­ded con­sequences on middle-class jobs and small busi­nesses. For these and oth­er reas­ons, tax pro­pos­als con­tin­ue to fail wherever they are in­tro­duced.”

The UIC re­search­ers looked at Illinois—their home state—and Cali­for­nia to study the ef­fects of soda taxes on the labor mar­ket. Cali­for­nia is one state where voters have con­sidered but de­feated soda-tax bal­lot meas­ures, and San Fran­cisco is con­sid­er­ing an­oth­er tax meas­ure again this fall. The re­search­ers found an in­crease of 4,509 jobs in Illinois and 6,252 jobs in Cali­for­nia.

The study was con­duc­ted in­de­pend­ently through a grant from the Healthy Eat­ing Re­search Pro­gram of the Robert Wood John­son Found­a­tion, which is a phil­an­throp­ic or­gan­iz­a­tion de­voted to im­prov­ing pub­lic health.

“It’s im­port­ant for health; it is a sub­stan­tial amount of money, and it looks like it would not hurt jobs and may even mod­estly help,” said Jim Marks, seni­or vice pres­id­ent at RWJF. “The ques­tion is, will in any jur­is­dic­tion, will the lead­ers and the pub­lic sup­port such a tax in a way so that it can im­ple­men­ted and see its ef­fects in the real world?”

While sug­ar-sweetened bever­ages have been linked with obesity, dia­betes, and oth­er health prob­lems, ABA also says its mem­bers are not dir­ectly re­spons­ible for the na­tion’s obesity epi­dem­ic. Obesity has been on the climb while the sug­ar con­tent of drinks has fallen. Des­pite the de­bate around the over­all pub­lic health ef­fect, nu­mer­ous soda-tax meas­ures around the coun­try in­clude pro­vi­sions to spend a por­tion of the rev­en­ue on child­hood well­ness and anti-obesity pro­grams.

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