City Hall

Soda Tax Bill Now Excludes Diet Drinks

Lisa Herbold's controversial package of amendments would've put diet soda back in the mix, reduced the tax to 1 cent per ounce, and still raised more money.

By Hayat Norimine May 31, 2017

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Seattle's updated soda tax no longer includes diet drinks. 

Council members passed the legislation out of the finance committee Wednesday morning, and Tim Burgess's new bill sent to council members at the end of the day on Tuesday removed diet beverages from the taxed products. And an amendment proposed by Lisa Herbold, to put them back in, failed to pass with a 4-3 vote against. (Mike O'Brien and Kshama Sawant supported it; Burgess, Sally Bagshaw, Lorena Gonzalez, and Rob Johnson opposed.) 

Burgess said he ultimately excluded them to follow the science, which experts say is inconclusive as to whether diet soda also has harmful effects on public health. Studies also show that when diet soda is also taxed, there's less reduction in consumption of the sugary beverages, officials said.

Mayor Ed Murray added diet soda to his proposed tax after the city's racial equity toolkit showed a racial disparity between those who consume diet and regular soda; white people and high-income earners tended to drink diet beverages. Herbold said by adding diet soda, it taxes a broader population of Seattle and eases the inherently regressive nature of the excise tax. (Low-income people and people of color will be a large chunk of the tax's revenue source.) And she was critical of a bill that would ignore the results of the toolkit.

"We have a responsibility to shift our policy in order to address that," Herbold said Wednesday morning.

Herbold's package of amendments instead aimed to address both racial disparity and labor concerns, while still raising more money for the city—by adding diet soda and reducing the tax to 1 cent per ounce, instead of 1.75 cents per ounce. (That amendment only received Sawant's support.) Herbold's proposal was estimated to raise $15.5 million a year, while the current proposal raises $14.8 million, according to recent analysis from central staff. And, she argues, the 1.75-cent tax is more politically vulnerable.

Of the six other jurisdictions that passed soda taxes, most of them began with 1 cent. Philadelphia’s is 1.5 cents, and Boulder’s is 2 cents. Only two of the cities included diet beverages. 

"That was a tough call and I don't think there's necessarily a right answer," Burgess said to PubliCola Wednesday. "But I personally—and I think the committee—was persuaded that in fact this tax is being advocated by people of color."

Burgess said he distributed a summary to council members ahead of time that had two versions of the bill, one with diet and one without, to comment on. Ultimately, Burgess said, what was important to him was accomplishing the greatest reduction in consumption as possible. 

"If you want to talk about regressivity and disproportionality, the harm being done to those populations by the sugary drinks is profound," Burgess said in the committee meeting. 

The current proposal is estimated to reduce consumption by 40 percent, while Herbold's would've reduced consumption by 27.4 percent. But O'Brien supported including diet drinks because, he pointed out, no one really knows what its health effects are yet. 

"It's possibly shifting folks from one bad product to another bad product," O'Brien said.

Still, there's the concern over the legislation's impact to small businesses, though council members tried to mitigate some of that loss. The tax excludes products made by manufacturers that have $2 million or less in gross revenues, and the ordinance includes $1.5 million set aside for jobs retraining. But the Martin Luther King County Labor Council and Seattle Chamber of Commerce still opposed the tax, sending a joint press release Wednesday that said the tax would "wreak economic harm on small businesses and working families alike." 

“Even at a lower tax rate, this is yet another law that makes things more complicated for small businesses in Seattle’s restaurant and retail industries, and it remains unclear how this tax meaningfully advances the city’s goals around public health and education," said Mindi Linquist, Metro Chamber's vice president of external affairs, in an emailed statement when asked whether the tax would've been preferred with Herbold's amendments. "Council members’ comments at today’s hearing about the lack of time they had to review the legislation and proposed amendments show how rushed the Council’s process around this bill has been. It’s concerning that the final vote is less than a week away.”

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