Background: In a Microeconomics class I completed, I wrote a paper discussing the effects of Seattle’s sweetened-beverage tax. This excerpt (Paragraphs 2 and 3) highlights my ability to research multiple sources and use them to explain the impacts of current legislation. I was also able to interpret statistics and paraphrase them for a general audience.
There are section headers included in this excerpt.
Seattle’s Current Policy of Taxation
According to seattle.gov, which is managed by the City of Seattle, the city’s tax on carbonated beverages went into effect in January of 2018. The tax is placed on distributors, meaning they are the ones directly paying the tax to the government, not retailers or consumers (Goings). This does not mean that prices are not raised for consumers, as we learned that if the demand curve for a product is perfectly inelastic, and a tax is added, that extra payment can be entirely passed on to the buyer (Lecture 1/23). The rate at which sugary drinks are being taxed is $0.0175 per ounce of drink sold (Goings). Stated in the text of Ordinance 125324 are reasons that the Seattle city government has instituted the tax as well as ways money raised from the tax will be spent. One reason they have created the tax is because carbonated beverages are not healthy (Seattle City Council 2). In addition, there is a connection between type 2 diabetes and obesity with the greater quantities of soda being digested by Americans in the past ten years (Seattle City Council 2). To this end, the Seattle City Council wanted to tax carbonated beverages “to raise revenue to fund services that will promote healthy food choices, expand access to healthy and affordable food,” among other measures to improve social equity between races and people of varying socio-economic status (Seattle City Council 2-3).
Known Effects of Seattle’s Policy
So far, the tax is having desired effects of lowering sales of carbonated beverages. From February to September 2018, revenue earned from these drinks went down 30.5% according to The Seattle Times’ review of a recent study (Beekman). The study compared carbonated beverage sales in Seattle to Portland for 2018, which does not have this tax, as well as comparing soda sales in Seattle in 2018 to the years 2016 and 2017, before the tax was instituted (Beekman). Evidence from Portland suggests the tax did have an effect, as sales there only dropped 10.5% in 2018, and it’s also clear that sales across the cities’ borders were not common, meaning people were not shopping outside of city limits to buy soda for cheaper prices (Beekman). In addition, it was discovered that $22 million was collected from the tax in 2018, which would be going towards the programs I mentioned earlier that were in the City of Seattle’s Ordinance to improve public health and education, especially for Seattle’s poor (Beekman).
Works Cited
Beekman, Daniel. “Sweetened-beverage sales in Seattle dropped 30% after soda tax, new study says.” The Seattle Times, 19 Feb 2020, seattletimes.com/seattle-news/politics/after-soda-tax-sweetened-beverage-sales-in-seattle-dropped-30/. Accessed 25 February 2020.
Goings, Calvin W., director. Sweetened Beverage Tax – License and Tax Administration. City of Seattle, 1995-2020, seattle.gov/license-and-tax-administration/business-license-tax/other-seattle-taxes/sweetened-beverage-tax. Accessed 25 February 2020.
Seattle City Council. “CB 118965 – Signed Ordinance 125324.” Sweetened Beverage Tax – License and Tax Administration, City of Seattle, 1995-2020, seattle.legistar.com/View.ashx?M=F&ID=5246235&GUID=FA389302-A085-4AC7-8AB1-60F41C4B4DD0. Accessed 25 February 2020.
Carissa Winslow 