Nearly all of Seattle’s soda tax is being passed on to
consumers, new report shows
Stores across the city have passed on the cost of Seattle’s
soda tax to consumers, a new study shows. (Ken Lambert / The
Seattle Times)
The city collected nearly $17 million in the first nine months
of the tax — and officials are counting on the money to keep
rolling in.
By Daniel Beekman
Seattle Times staff reporter
Nearly 100 percent of Seattle’s new tax on the distribution of
sweetened beverages has been passed on to consumers through higher
in-store prices, a new report estimates.
But some taxed beverages have increased in price more than
others and some stores have increased their prices more than
others, according to the report by University of Washington
researchers that City Council members are set to discuss
Wednesday.
Sodas have increased in price more than sugar-sweetened juices
and bottled coffee drinks, and smaller stores have increased their
prices more than supermarkets, the report indicates.
Additionally, some smaller stores have increased their prices
even for beverages not subject to the tax, such as diet
sodas.
“We don’t know why, but they did see something similar in
Berkeley,” the California city that adopted a tax before Seattle,
said research-team leader Jesse Jones-Smith, an associate professor
of health services and epidemiology.
Seattle’s tax of 1.75 cents per fluid ounce, which took effect
in January 2018, is charged to distributors of sugar-sweetened
beverages. But the distributors can pass the tax on to stores and
the stores can pass the tax on to consumers.
When the City Council approved the tax in 2017, many
proponents said the goal was to decrease consumption of unhealthful
beverages by driving up prices, while others supported the policy
because they said it would raise money for healthful-eating and
education programs.
Foes said the tax would disproportionately hurt people with
low incomes. Some store owners and consumers opposed the measure,
along with unionized beverage-industry workers.
The city collected nearly $17 million in the first nine months
of the tax, surpassing its initial expectations, and officials now
are counting on the money to keep rolling in, with substantial
annual declines no longer anticipated.
The UW researchers surveyed prices for various beverage types
at more than 200 Seattle stores of various types in fall 2017,
before the tax, and in summer 2018, after the tax.
To isolate the impact of the tax, they used more than 200
stores in Kent, Auburn and Federal Way as a control group.
Across all beverages and Seattle stores surveyed, an average
of 1.70 cents per fluid ounce — or 97 percent of the tax of 1.75
cents per ounce — was passed on to consumers, according to the
study.
For soda, the average pass-through rate was 102 percent, and
for sugar-sweetened teas and sports drinks, it was 84
percent.
For sugar-sweetened juice drinks, it was only 63 percent, and
for sugar-sweetened bottled coffee drinks, it was 62 percent.
At small stores, the pass-through rate was 104 percent, while
at supermarkets and superstores, it was only 86 percent.
The researchers have some guesses about why the tax impacted
different beverages and stores differently, but the report doesn’t
include explanations.
“The most important finding is that in the large grocery
stores most of the tax is being passed through,” Jones-Smith
said.
At small stores, the average pass-through rate for non-taxed
beverages such as diet soda and chocolate milk was 44 percent,
while at supermarkets and superstores, it was 0 percent.
The researchers didn’t survey some popular stores that devote
little shelf space to sugary beverages, such as Whole Foods, Trader
Joe’s and PCC Community Markets.
The UW team also is studying attitudes toward the tax, impacts
on sales and changes in consumption by low-income children.
State voters recently approved a ballot measure meant to block
other Washington cities from also enacting soda taxes.
Daniel Beekman: 206-464-2164 or
[email protected]; on
Twitter: @dbeekman. Seattle Times staff reporter Daniel Beekman
covers Seattle city government and local politics.
Briefly explain what the city council failed to understand.
Who ends up paying the tax? Was this the intent? The city council
doesn't understand what economic concept? Explain.