When nanny state campaigners talk about sugar taxes, they love to mention Berkeley, California. In 2014, the people of Berkeley voted 76 per cent to 24 per cent to introduce a soda tax. It was implemented the following year at a rate of one cent per fluid ounce, which for us limeys equates to about 10p on a 330ml can.
Campaigners like the Berkeley example for two reasons. Firstly because they can point to a study which claims that it led to a 9.6 per cent reduction in sugary drink sales. It’s a safe bet that this drop in sales was mainly due to people buying their soft drinks out of town; the same study shows a 6.9 per cent increase in sales in neighbouring areas (where sales were not rising before Berkeley introduced its tax). The study also found that Berkeley residents were consuming the same quantity of sugary drinks after the tax as they did before. But never mind, the bar is set so low for anti-obesity policies that a statistically insignificant reduction in energy intake of six calories per day counts as a ‘sweet success’.
The second reason ‘public health’ campaigners like the Berkeley soda tax is that it came about as a result of popular demand in a referendum. This makes a change from most sugar taxes which are imposed from above by governments that are thirsty for money. The hope was that Berkeley would be the first in a long line of dominoes and that communities all over America would vote to make themselves a little poorer.
But let’s not mince words. Berkeley is an odd place. Its university is the epicentre of America’s deranged political correctness wars and people in the town like to think of themselves as a bit different. And so they are. If you want to get an idea of what normal people think of soda taxes, don’t look at a town of 120,000 people that is considered freakish even by other Californians. Look at Cook County, Illinois, which is home to over five million people and America’s third biggest city, Chicago.
You won’t hear much about Cook County from ‘public health’ campaigners because its soda tax, which was introduced in August this year, has been phenomenally unpopular. Just nine days after it came into effect the Chicago Tribune described it as ‘one of the more vilified public policies in recent memory’. As in Berkeley, it is a levy of one cent per fluid ounce, but unlike in Berkeley, it has gone down so badly with residents that the County Board has just voted to repeal it.
This is extraordinary. You know how hard it is to get a politician to turn away tax revenue, and it is not as if Cook County doesn’t need the money. Its finances are in a terrible state and its politicians are obliged by law to balance the budget. They are going to have to find something else to tax because it is not going to be soft drinks. Despite nanny-in-chief Michael Bloomberg spending $5 million on advertisements promoting the tax, 86 per cent of residents are opposed to it. More importantly, 79 per cent of residents say they are less likely to re-elect a commissioner who supports it.
These are the kind of statistics that politicians take notice of. And so, when the vote was held yesterday, Cook County councillors who had voted for the tax less than a year ago acknowledged the public anger and repented. The tax was brought in by a margin of 9 votes to 8. It was kicked out in a 15 to 1 landslide. On 1 December 2017, Chicago’s soda tax will become a footnote in history.
It is reminiscent of Denmark’s fat tax of 2011-12 which had strong public support when it was only an idea and was carried through parliament in an almost unanimous vote. But the fat tax turned toxic as soon as consumers were faced with the reality. By the time it was repealed, 80 per cent of Danes were against it. As in Cook County and Berkeley, where shoppers have been buying their soft drinks out of town, Danish consumers hopped over the border to Sweden and Germany and left domestic retailers out of pocket.
These regressive taxes are simply not popular. When a referendum was called on a soda tax in Sante Fe in May, more people turned up to vote than had participated in the election of the mayor who proposed it. Despite another $1 million contribution from Nanny Bloomberg, the proposal was soundly beaten, with the opposition strongest in low income neighbourhoods.
There was no public vote in Ireland or Britain on whether soft drinks should become pricier. With comic timing, yesterday saw Ireland’s finance minister formally announcing a 30 cents per litre tax on sugary beverages just hours before the people of Chicago started celebrating.
What will be the reaction when British and Irish consumers face the reality of their own sugar tax next April? A slim majority of Britons supports the tax at the moment but then a large majority supported Denmark’s fat tax before it came into force. That could soon change when shoppers see prices jump.
Stealth taxes are supposed to be subtle. The sugar levy is a lumbering, spluttering, day-glo beast. From next April, regular and diet drinks will sit side-by-side on the shelves but with different price tags, a constant reminder to consumers that the government is picking their pockets. Campaigners hope that the visible price gap will nudge consumers into picking the zero-sugar option. It is more likely to cause resentment.
We have enough evidence from other countries to know that the tax will not significantly affect sugary drink sales and it certainly won’t reduce obesity. It won’t take long for people to notice this, nor will it take us long to learn that the tax is relieving us of £500 million a year. When we do, will we go all Cook County?
You might scoff, but if an extra 10p on a can of lemonade doesn’t seem enough to create public anger in Britain, I have one word for you: pastygate.