In recent years several cities, including San Francisco, Boulder, and Seattle, have imposed excise taxes on sodas and other sugary drinks with much fanfare - and much resistance from soda producers. Washington, D.C. took a different approach, quietly passing an increase in the sales tax on such beverages as part of its 2020 budget.
The new tax, which took effect last week, subjects sodas and other sweetened beverages that contain less than 100 percent juice or 50 percent milk to a levy of 8 percent, two percentage points more than the city’s existing 6 percent sales tax. The $3.2 million per year in revenue the tax increase is expected to generate will be used to help pay for programs that help some residents purchase fruits and vegetables, and provide free breakfasts for children of low-income families.
“We did this primarily to fund very important nutrition programs, particularly those for poor children,” said D.C. Council member Mary Cheh (D), who inserted the measure into the city’s budget. “But in addition, we’re hoping that it may signal sufficiently to discourage purchase of soda and sugary drinks and have people choose water or something that is healthier.”
Those aims are shared by supporters of soda taxes passed elsewhere. But unlike those measures, which have generally been excise taxes imposed on beverage distributors and retailers - who are free to pass along that additional expense to consumers - D.C.’s levy is a sales tax imposed directly on purchasers of the drinks. And since it was passed via the budget process rather than as a standalone bill, it required no public hearing.
That didn’t sit well with D.C. Council member Kenyan McDuffie (D), who said the tax increase should have gone through the usual legislative process.
“I...have been a champion for improving the health and wellness of District residents,” he said when the city’s budget was passed in May. “However, raising taxes on some of the District’s most vulnerable residents is a policy decision that should be made in a more transparent manner and with input from those most impacted.”
Cheh conceded that getting a sales tax increase passed as part of the budget was easier than winning approval for a higher excise tax, something she actually tried and failed to do in 2010 because of opposition from the soda industry.
“That would have been a much bigger lift, and I wanted to do what I could now,” she said. (WAMU [WASHINGTON, D.C.])