Beverage Industry analysts fear that a tax increase on sugar-sweetened beverages will discourage consumers from purchasing and consuming soft-drinks and other sugary beverages.
As a number of cities across the U.S. begin to wage war against soft drinks, industry analysts fear that the new attention being placed on these sugar-sweetened beverages may threaten their sales.
According to a report from USA Today, some cities have proposed adding extra taxes to sugary soft drinks, while others have proposed the implementation of health warning labels, in an effort to deter customers from purchasing these beverages.
So far, according to USA Today, a handful of cities have taken action to single out soft drinks, and this increase in attention is likely to have harmful effects on the sales of these beverages.
The report from USA Today named the following cities among those cities that are currently seeking a tax increase on sugary beverages:
- San Francisco: Beginning in July, advertisements for sugar-sweetened drinks will be required to carry warning labels.
- Philadelphia: The city council will vote, in June, on a proposal to tax all sugar-sweetened beverages (not limited to soft drinks). The proposed tax is an increase of three cents per ounce, which would add 60 cents in additional taxes to a 20-ounce bottle.
- Oakland, Calif.: In November, a vote will be held to decide whether to add a one cent per ounce fee to sugary beverages.
- Boulder, Colo.: Voters may have the chance to vote on whether to impose a soda tax, this fall.
USA Today reported that, in Philadelphia, the additional tax revenue would be used to fund early childhood education and other community initiatives. Philadelphia officials claim that the tax increase is not an attempt to discourage the consumption of soda, but opponents of the tax plan claim that the sugary drink tax will hurt small businesses. Also, recent downward trends in soda consumption will make this tax an unreliable source of revenue.
Contrarily, a study on Berkeley, Calif.’s soda tax, which went into effect in March 2015, has revealed that the measure raised retail prices less than half the amount that was expected, according to USA Today. The intent of this particular measure was to make sugary beverages more expensive, and to thereby decrease consumption, but the measure sis not raise prices as much as it had intended.
Additionally, soda sales are climbing in Mexico, approximately two years after the country imposed a 10% tax on sugar-sweetened drinks, according to USA Today.