Price increase takes effect after implementation of Berkeley’s ‘soda tax’

Jamin Kim-Sanders/Staff

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A study released Wednesday found that the retail price of sugar-sweetened beverages in Berkeley increased more than in nearby cities after Berkeley residents voted in November to tax these beverages.

The study, authored by UC Berkeley researchers among others, found that the average price of all sugary drinks in Berkeley had increased by about half a cent more per ounce and the price of soda alone had risen by about 0.7 cents more per ounce than in other cities.

The study also found that the price of nonsugary drinks in Berkeley did not change more than in Oakland and San Francisco.

Berkeley’s “soda tax” is an excise tax, meaning sugary-drink distributors pay an extra cent per ounce to the city. Excise tax, unlike sales tax, is passed down from distributors to retailers and then to consumers, said Jennifer Falbe, a campus postdoctoral fellow and co-author of the study.

According to Falbe, the study compared price changes of sugar-sweetened beverages (which include sodas, sports drinks and fruit-flavored drinks) in Oakland and San Francisco to those in

Berkeley. Initial price data were collected even before Berkeley residents voted on the tax in case the vote affected beverage prices. The second round of data collection occurred in June, three months after the first collection of the tax.

Alan Auerbach, a UC Berkeley economics and law professor, said the study didn’t account for the potential shift of soda purchases from Berkeley to Oakland in response to the tax.

The tax was the first of its kind nationwide.

Opponents of the tax raised more than $1.4 million for the campaign against the tax in Berkeley, with significant contributions from the political arm of the American Beverage Association, a beverage trade organization with members including Coca-Cola and PepsiCo.

In addition to attempting to reduce consumption of sugar-sweetened beverages, the tax also raises money for the city’s general fund, which is used to pay for projects such as improving city streets and sidewalks.

The city raised $375,000 from the tax in the first three months of collection, according to the Sugar-Sweetened Beverage Product Panel of Experts.

According to Holly Scheider, a commissioner on the panel, a further benefit of the tax is its educational value.

Although the study accounts for only the first three months of tax collection, the data is an indicator that the tax is “having the effect it was intended to,” Falbe said.

“(The study is) showing evidence that the tax is on the right track,” Falbe said. “But it’s still early, and we should keep watching how prices change over time.”

Staff writer Daniella Wenger contributed to this report.

Contact Laurel Bard at [email protected].