Election 2012: Measure N and Measure O
on October 31, 2012
A group of progressive city leaders that have never shied from social engineering are now trying to pull off a first-in-the-nation challenge: get voters to approve a tax on sugar-sweetened drinks.
Councilmember Jeff Ritterman and the Richmond Progressive Alliance have fiercely advocated for Measure N, which would tax businesses one cent per ounce of sugar-sweetened beverages they have in stock. The money would go into the city’s general fund, but a nonbinding companion Measure O would advise the City Council to spend the money on anti-obesity programs, sports fields, and cooking and nutrition classes.
RPA members wear the support on their backs, hang it in their cars, and pass it around on the streets of Richmond. In their office sits a red wagon filled with 40 pounds of sugar, which Ritterman says represents how much sugar a child will consume in one year from drinking soda.
More than half of Richmond’s children are overweight or obese, according to a report prepared by Contra Costa Health Services in 2011. The adult obesity rate in Richmond is 24 percent—while the national average is 35 percent—and it’s estimated that when the current generation of children reaches adulthood, that number will spike to 42 percent.
Just how much sugar-sweetened beverages contribute to those percentages is what health professionals and those in the beverage industry are debating.
A 2010 study conducted by the Center for Weight and Health out of UC Berkeley found that “sweetened beverages account for at least one-fifth of the weight gained between 1977 and 2007 in the US population.”
In a recent lecture at UC Berkeley, Kelly Brownell, the director of the Rudd Center for Food Policy and Obesity at Yale, said sugar-sweetened beverages are “public enemy number one in targeting the nation’s obesity.”
Those on the other side of the debate don’t dispute that obesity rates are rising and a cause for concern, but they point to studies that have shown a decrease in the consumption of added sugar in the United States. A study from The American Journal of Clinical Nutrition found that between 1999 and 2008, there was a steady decline in the intake of added sugar, which the researchers attribute to a reduction in soda consumption. When comparing 1999-2000 and 2007-2008, the daily average intake of added sugars decreased from 100 grams to 76 grams.
Dr. Brazell Carter, a Richmond doctor who is shown on campaign mailers opposing Measure N has echoed what others in the community say is wrong with the measure.
“I think we need to have a fair and balanced approach to say that sugar is not the only thing that makes you fat,” he said. “There are other things that go along with it—the fat and the salt. It’s the combination of the three.”
Though he said he’s not a proponent of the sugar industry, he said it should not be labeled as the lone culprit.
The Community Coalition Against Beverage Taxes, a committee formed to oppose Measure N, has spent more than $2.4 million to defeat the tax. Most of its funding comes from the American Beverage Association, a trade organization with members such as Coca-Cola and Pepsico.
Billboards and signs opposing the measure line just about every block on major streets in Richmond.
“The Richmond Beverage Tax is unfair—it hits poor and working people the hardest,” reads one billboard on Harbor Way.
Opponents call the tax regressive and claim the poor will pay for the brunt of the tax.
In his lecture, Brownell said he doesn’t buy that argument.
“I think taxes are only regressive if people really need what they’re buying,” he said.
The CCABT’s website cites findings from the Berkeley Research Group, a private consulting firm based in Emeryville, that it will “cost Richmond consumers and businesses up to $12.8 million in new taxes and loss of revenue.”
Local businesses “are going to lose sales because the people who can or are motivated to will go elsewhere to shop,” Finnie said.
The CCABT’s website lists dozens of businesses in Richmond that oppose the measure.
Nathan Trivers’ business isn’t one on the list. His restaurant Up and Under in Point Richmond regularly serves city councilmembers, including Ritterman, but he didn’t hesitate to critique the tax.
“I don’t feel the thing has any legs,” Trivers said.
Trivers said he doesn’t oppose taxes on businesses, but said he doesn’t believe the revenue will go toward what Measure O pledges.
“Show us where the money’s going,” Trivers said.
Mayor Gayle McLaughlin said she and Ritterman wrote the measure to have the tax revenue go into the general fund because it requires only a simple majority to pass, instead of a two-thirds majority if it had the funds going toward something more specific.
“With the money that Big Soda is putting into this, it’s already quite a battle,” McLaughlin said. “But if we had to get two-thirds vote, it would have been a bigger battle. So we thought this was the better way.”
Measure N makes the tax a part of the business license fee, which is paid once a year by business owners. The current fee is $234.10 a year, not including additional money based on the businesses’ number of employees. Because the tax is based on inventory, not sales, the decision to pass the tax onto the consumer rests on the businesses.
Trivers said he would have to increase his prices.
“I’m not taking it out of my backend for the city,” he said.
The measure has also left some business owners confused about logistics. City officials admit that because there is no model for Richmond to follow, there are still questions to address if the measure passes.
“It’s new for us,” said Financial Director James Goins, whose department collects city taxes.
Ritterman said this could be used to the city’s advantage. Any money invested in the taxation system, he said, could be recouped by selling it as a toolkit to other cities that want to follow in Richmond’s footsteps.
But with even the authors uncertain about the final implementation of the measure, the questions haven’t stopped there for business owners like Trivers.
Trivers’ restaurant has a fountain machine behind the counter, which mixes syrup from a bag with soda water to make the finished drink, what ends up in the customer’s cup. Ritterman said the measure would tax businesses on the finished drink, based on a syrup-output ratio that the city will determine.
After hearing this, Trivers paused.
“We’ll just try to talk this out so we both understand clearly on what this means,” Trivers said.
“So I grab a 16-ounce mug, OK? I put ice in it, and I fill it up with liquid. Now, the liquid—if I had no ice—it’s 16 ounces of soda,” Trivers said.
“They need to get their shit straight and figure out their mathematics,” he said.
Milt Moritz, president of the National Association of Theatre Owners of California/Nevada, said for movie theatres, a tax on the finished drink would not be an accurate measure of how much soda they actually produce. Moritz said that when theaters are experiencing high traffic and long lines, employees aren’t going to wait until the syrup container has run out to refill the machine. This would mean theaters would be paying for syrup they didn’t use, he said. Cinemark, the movie theater company that owns Richmond’s only theater, has contributed nearly $107,000 against the measure.
Although Ritterman says the measure is intended to target sodas, other kinds of beverages fall under the city’s definition of a sugar-sweetened beverage and would be taxed as well—including sports drinks, fruit juices with added sugar, and chocolate milk.
There are beverages exempted from the law, such as diet drinks, a point clarified earlier this month in a “Sugar-Sweetened Beverage Policy” document issued by the city attorney.
Dietary aids are also exempted, which would make infant formula and oral nutritional beverages like Ensure not taxable.
Other drinks are not so simple to tax. Places like Starbucks— where consumers can decide how much syrup they want in their drink— don’t have a definite answer about what and how they’ll be taxed. Ritterman said he wasn’t sure yet and would need to see what others thought once the measure has passed.
For Ritterman, it’s the big picture that counts most – and the fight against sugar and soda is parallel to earlier fights to regulate and tax tobacco.
“[Big Soda] is really the Big Tobacco of today,” Ritterman has said. “And they’re going to have the same outcome as Big Tobacco.”
Karen Hanretty, the vice president of public affairs for the American Beverage Association, called the comparison “absurd,” since there’s no danger from “second-hand soda.”
“It’s almost offensive,” she said, “that you would compare that and almost diminish the significance of [smoking] by comparing it to a sparkly beverage. It’s such an overreach.”
For others who worked on tobacco policy reform, they see overlap in the ABA’s argument against taxation and what cigarette companies said back in the ‘70s.
“Tax on the poor—same argument for tobacco,” said Steve Sugarman, who worked on tobacco research after Prop 99 passed and increased California’s cigarette tax 25 cents in 1988.
But, he said, just as with tobacco regulation, the tax’s success would depend on how consumers react to the policy.
“In other words, people who were at the poor end had a way of dealing with that. And I think that’s what will happen here. A lot of poor people, they’ll switch to house brands,” he said. “But you won’t get any less sugar consumption out of that.”
Sugarman said it was a combination of taxes, restrictions on where to smoke, and hostile advertisements against the industry that gave tobacco the bad image it has now. But Sugarman said although there are similarities between the two policy regulations, audiences are not viewing soda companies in the same way they view cigarette companies.
“I mean, people like soft drinks,” he said. “People don’t view Coke and Pepsi the way they view Camels and Philip Morris.”
Finnie said he sees linking the two industries as Ritterman’s goal, and that vilifying soda companies is already taking place in Richmond. Ritterman is playing a bigger game to “demonize soda companies, to use demagoguery, and to accuse them without foundation that somehow the soda industry is responsible for the obesity problem in the country,” Finnie said.
For Stanton Glantz, Director of the Center for Tobacco Control Research and Education at UCSF, and a key figure in the decades long battle against smoking, the trajectories that soda and cigarette companies are on is almost identical.
“To me, it’s like a 97 percent parallel. The only difference is there’s a different big corporate interest who’s trying to oppose a sensible public health regulation,” he said. “It’s the big corporate interests fighting against grassroots citizens’ efforts.”
Opponents of Measure N also question whether a penny-per-ounce tax will be enough to significantly reduce the consumption of sugar-sweetened beverages and have any noticeable impact on the obesity rate.
Several studies have shown that a tax on sugar-sweetened beverages could have an impact on consumption, but the results vary based on how high the tax is.
According to a 2010 United States Department of Agriculture study, taxing sugar-sweetened beverages by 20 percent could result in an average reduction in 43 calories per day, or 4.5 pounds over a year for children.
A study out of the Institute for Health Research and Policy at the University of Illinois, Chicago found that an estimated 24 percent reduction in sugar-sweetened beverage consumption from a penny-per-ounce tax could reduce someone’s daily caloric intake by 45 to 50 calories.
[Editor’s note: The graphic attached to the story has been corrected to reflect the type of Naked Juice that would not be considered “sugar-sweetened” under Measure N. The company’s “red machine” has added juice from concentrate, which would be taxed, but “green machine” does not and so would not be taxed.]
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