Big Sugar's Global War on Taxes

Since January 2017, Philadelphia residents wanting a sugar hit have taken an accompanying hit to their wallet. The city, where almost 68% of adults are overweight or obese, was the first major city in the United States to pass a tax on sugary drinks. Unsurprisingly, Big Soda is pushing back. The Pennsylvania Supreme Court is currently hearing oral arguments on the legality of the tax on soda and other sweetened beverages, after an appeal led by the American Beverage Association.

And the US -- and indeed, governments and food and drinks industries all over the world -- will be monitoring the outcome. The case isn't only crucial for Philadelphia, which has earmarked the money raised from the sugar levy to fund universal pre-kindergarten education, but also for the growing number of countries and cities with sugar taxes. In the US alone, there are seven other municipalities with sugar taxes. If Big Sugar wins in Philadelphia, it will be emboldened to challenge similar taxes throughout the world.

For sugar tycoons, this is a watershed moment that could completely change our consumption of the sweet goods their livelihood depends on. As Dan Newman, a strategist who worked on anti-sugar campaigns in the US remarked, "the soda industry faces an existential crisis in which they are on the cusp of becoming social pariahs, much like the tobacco industry".

While critics initially claimed that this sort of tax could only work in liberal enclaves, it is fast becoming a global movement. Mexico, where 70% of the population is obese, instituted a sugar tax in 2013. South Africa, where obesity has doubled among young people in just six years, recently introduced a similar tax. In Kenya, the obesity rate has more than doubled since 1990, in part thanks to Big Soda's tactics to get Africans hooked on their products, such as producing smaller, cheaper bottles. To tackle this crisis, Kenya's tax authority recently decided to extend its Excisable Goods Management System (EGMS), a sophisticated electronic tax system developed by Swiss firm SICPA that slaps high-tech tracing stamps on packaging to ensure compliance, to sodas.

While it's still early days for most of these taxes, they seem to be having a positive impact. In Berkeley, California, sugary drink sales plummeted by almost 10% after a soda tax was introduced. Significantly, Berkeley data also showed that consumers were being incentivized to buy healthier drinks, rather than not purchase beverages at all. In Mexico, purchases of sugary drinks had fallen by 12% by the end of 2014, particularly among lower socioeconomic groups. Similarly, the EGMS proved highly successful tracking alcohol and tobacco, increasing tax revenues by an estimated 45%; Kenyan authorities hope that a similar increase for soda would reduce consumption.

In addition to the direct health effects from tapering sugar intakes, citizens are already benefiting from the various programs the sugar tax revenue is bankrolling. In Philadelphia, for example, where 37% of youth live below the poverty line, the sugar tax opened up 2000 fully-funded pre-K places. Philadelphia mayor Jim Kenney estimated that the city could have provided another thousand places if it weren't embroiled in the expensive court battle against Big Sugar.

Just as they're doing in Philadelphia, however, the powerful sugar industry has fiercely pushed back against these public health initiatives--often borrowing dirty tricks from the playbook of that other great enemy of public health, Big Tobacco.

Soda giant Coca-Cola, for example, has long been funding research to shunt the obesity conversation away from reducing sugar consumption and towards getting more exercise. Just like Big Tobacco, Coca-Cola sets up front groups to reach questionable conclusions on their dime, such as the benign-sounding Global Energy Balance Network.

Government lobbying-- and extensive campaigns to influence public opinion -- has also played a part. Among the soda industry's mouthpiece groups is Americans against Food Taxes, created to run anti-tax campaigns. Despite this grassroots-sounding name, the ads they're putting up during the Super Bowl are funded by businesses that have a strongly vested interest in encouraging Americans to chug soda at the expense of their own health. Perhaps most troubling of all, Coca-Cola and Pepsi are also corporate sponsors of the American Dietetic Association.

Big Sugar's might and persistence has chalked up a few wins around the world. In Santa Fe, New Mexico, voters rejected a proposed sugar tax, influenced in no small part by campaigns funded by the American Beverage Association, who slipped leaflets through doors featuring images of crestfallen children and lemonade stands. In Chicago, the sugar tax was canned by commissioners after just two months. In Kenya, the EGMS was declared unconstitutional after a challenge brought by an activist accused of colluding with industry actors.

These victories may be more fleeting than Big Sugar had hoped, however. The Kenyan Court of Appeal is going to let the extension of the EGMS go ahead. In New Mexico, a state senator has brought the issue back on the table by calling on the state's Legislative Finance Committee to conduct a study analyzing the revenue, public health and commercial impacts of a soda tax, much to the chagrin of the state's Republican governor. And while the Pennsylvania Supreme Court still hasn't made up its mind, the tax was upheld in all the lower courts, suggesting that health campaigners in Philadelphia may yet have the edge.

Public health advocates recognize that even if they are victorious in all these cases, it's only the beginning of a long battle against powerful sugar interests. Despite the fact that efforts to deliver body blows to the tobacco industry began in the 1960s, the smoking lobby is still inveigling itself with governments and health bodies around the world. And with leaked documents indicating that Big Soda will not be taking these threats to its dominance lying down, it is clear that the world has a long way to go before it becomes "sugar-free."