Seattle: beverage tax backers on sugar high

The city of Seattle has now put its stiff new 1.75 cents per ounce tax on sugary beverages (text of bill) into effect, and Costco managers in the tech city, much to their credit, have not hesitated to post signs informing shoppers of its impact. According to a reporter’s photo, the sign atop a Gatorade Frost Variety Pack lists the regular Costco price of $15.99 along with $10.34 in newly added Seattle tax for a total of $26.33. Helpfully, an adjacent sign advises shoppers that the same item “is also available at our Tukwila and Shoreline locations without City of Seattle Sweetened Beverage Tax.”

Following KIRO7 News coverage of the story, Scott Drenkard of the Tax Foundation wrote a funny Twitter thread on the positions taken by the various advocates:

  • “First they interview people at the Costco who are rightfully shocked at how high prices on soda and sports drinks are now (they are almost doubled).”
  • “Then they interview a public health advocate who says ‘that’s right! We want these prices to change people’s behavior and slow sales!’”
  • “Then they talk to the consumer, ‘think you’ll change your behavior, maybe even shop somewhere else?’ And she’s like, ‘ya the Tukwila store is close enough.’ Then they ask a city council member if this will hurt local biz, who says ‘there is no data’ suggesting that.”
  • “Then the SAME public health advocate says that people won’t respond to price increases, shopping elsewhere because it isn’t ‘worth their while.’”
  • “You can’t have it both ways people! The tax is either big enough to elicit behavior change, which would slow sales and hurt local biz and potentially reduce calories, or it isn’t. Get your stories straight!”

In 2016 I wrote about Philadelphia’s soda tax that “while all taxes are evaded to some extent, excise taxes are especially subject to evasion based on local geography”, and followed up on the Philly measure’s possible openings for unlawful evasion and eventual public corruption. Seattle authorities intend to use the hoped-for $15 million revenue stream to fund various causes and organizations including an effort to bring fresh fruits and vegetables to urban neighborhoods, even though the once-voguish “food deserts” theory blaming dietary choices on the retail environment has sufferedone debunking after another in recent years. [cross-posted and expanded from Cato at Liberty]

P.S. I used to see this constantly from trial lawyers and their advocates on the question of whether it was a good thing for liability insurance rates to rise reflecting the big liberalization of tort recovery that was going on when I wrote The Litigation Explosion. Higher rates were socially desirable, they would say, because they would expose and discourage dangerous actors, such as incompetent doctors and drivers. There followed a big public reaction when it turned out it was not so easy to pick out bad apples ahead of time and that entire specialties like obstetricians and neurosurgeons were having to pay massive premiums. They then switched to the position that there was no connection between expected future payouts and liability premiums, that the problem was insurance companies being greedy, and that liability insurance rates should be frozen by law.

P.P.S. “Philadelphia implemented a 1.5-cent tax on soda in January of last year. …By August, the marketing firm Catalania found a 55 percent decline in the sale of carbonated soft drinks within the city limits — and a 38 percent jump in stores just outside of Philadelphia. Revenue from Philadelphia’s soda tax has also proven disappointing, coming in at $7 million below projections for fiscal year 2017.” [Christian Britschgi, Reason]


  • So I wonder what would happen if a restaurant would charge for a cup and the soda was free?

    • The restaurant would have to bypass where they source the bulk soda and if the tax only applied to retail stores. Then yes they can circumvent the tax in Seattle.

  • Aren’t “fresh fruits” filled with sugar? Are they taxing fruit juices? Are you telling me that a bunch of politicians know the differences between frucose, sucrose and high frucose corn syrup? From a sugar perspective, what is the difference between a couple juice boxes and a similar volume of whatever soda you choose? Are they skipping the tax on diet soda? So there’s a drastic price difference between a coke and a diet coke? And are they certain that the chemicals used in the diet coke are better for the consumer than sugar?
    So let me understand it… In seattle there is to be a $15 min wage and a sugar tax. Hmmm, I don’t see any way that could drive businesses outside the city limits reducing the tax base…

  • Cook County Illinois just announced they are laying off over 300 employees and eliminating 1000 vacancies, including 77 from the sheriff’s department and 100 from the court system, because they repealed the soda tax and now have a budget shortfall. They projected $200M in revenue from that tax, and now that they aren’t going to get it, out of a $5Billion budget, the only place they could fire people was in law enforcement and the courts. Oh and drug counseling.

    Since the purpose of the tax is to get people to use soda, then logically you would expect revenue to go down. So why pin your operating costs on it, knowing it will be a declining revenue (and especially knowing your projected revenue is a fantasy anyway because everyone is gong to bop across the city limits to boot leg soda).

    • Sort of surprised that the legal eagles in Cook county didn’t decide to set up sugar-soda checkpoints to keep illegal soda from entering the county.
      Works so well for guns, alcohol, pot, and cigarettes.

  • At what point does a tax became confiscatory? How high must it go?

    • When it’s your stuff they take.


  • If the problem is obesity, then they should make sure the obese pay directly for the extra public costs they incur. And allow insurers to charge the overweight or obese more (or deny coverage altogether).

    But don’t tax sugar! I’m 5’10” and 150# (55 year old male). And I enjoy a sugary beverage from time to time. Why should I be punished because of other people’s choices?

  • Robert, they taxed cigarettes from the beginning of time, but when it came down to having to spend money then the states didn’t want to have anything to do with that. Taxes are to line the pockets, not pay things…