Taxing Sugary Drinks: The Seattle Story and Issues in Tax Design

Addressing childhood obesity is a priority issue for Public Health – Seattle & King County. One strategy for achieving this goal is to reduce consumption of soda and other sugary drinks. The Washington State Legislature recently passed a sales tax on soda and candy. Industry invested over $16 million to successfully pass a ballot initiative that overturned the tax. Given the lack of progress at the state level, Public Health – Seattle & King County is considering multiple local strategies for encouraging residents to cut consumption of sugary drinks including media campaigns; limiting purchase of sugary drinks by local government; reducing availability in schools, childcare, worksites and public places; and taxation. Taxing sugary drinks may raise revenue for obesity prevention, correct market failure in which external costs of sugary drink consumption are not borne by producers and consumers, and decrease consumption. Issues that have come up as Public Health has considered the design of a tax include tax vehicle, collection and audit mechanisms, use of tax revenue, and definition of sugary drink. Public Health anticipates substantial industry opposition to all strategies aimed at reducing consumption of sugary drinks, especially the imposition of a tax. In this session, we will discuss the current status of taxation efforts in Seattle and how we are addressing these issues.