The city collected nearly $17 million in the first nine months of the tax — and officials are counting on the money to keep rolling in.
Nearly 100 percent of Seattle’s new tax on the distribution of sweetened beverages has been passed on to consumers through higher in-store prices, a new report estimates.
But some taxed beverages have increased in price more than others and some stores have increased their prices more than others, according to the report by University of Washington researchers that City Council members are set to discuss Wednesday.
Sodas have increased in price more than sugar-sweetened juices and bottled coffee drinks, and smaller stores have increased their prices more than supermarkets, the report indicates.
Additionally, some smaller stores have increased their prices even for beverages not subject to the tax, such as diet sodas.
“We don’t know why, but they did see something similar in Berkeley,” the California city that adopted a tax before Seattle, said research-team leader Jesse Jones-Smith, an associate professor of health services and epidemiology.
Seattle’s tax of 1.75 cents per fluid ounce, which took effect in January 2018, is charged to distributors of sugar-sweetened beverages. But the distributors can pass the tax on to stores and the stores can pass the tax on to consumers.
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When the City Council approved the tax in 2017, many proponents said the goal was to decrease consumption of unhealthful beverages by driving up prices, while others supported the policy because they said it would raise money for healthful-eating and education programs.
Foes said the tax would disproportionately hurt people with low incomes. Some store owners and consumers opposed the measure, along with unionized beverage-industry workers.
The city collected nearly $17 million in the first nine months of the tax, surpassing its initial expectations, and officials now are counting on the money to keep rolling in, with substantial annual declines no longer anticipated.
The UW researchers surveyed prices for various beverage types at more than 200 Seattle stores of various types in fall 2017, before the tax, and in summer 2018, after the tax.
To isolate the impact of the tax, they used more than 200 stores in Kent, Auburn and Federal Way as a control group.
Across all beverages and Seattle stores surveyed, an average of 1.70 cents per fluid ounce — or 97 percent of the tax of 1.75 cents per ounce — was passed on to consumers, according to the study.
For soda, the average pass-through rate was 102 percent, and for sugar-sweetened teas and sports drinks, it was 84 percent.
For sugar-sweetened juice drinks, it was only 63 percent, and for sugar-sweetened bottled coffee drinks, it was 62 percent.
At small stores, the pass-through rate was 104 percent, while at supermarkets and superstores, it was only 86 percent.
The researchers have some guesses about why the tax impacted different beverages and stores differently, but the report doesn’t include explanations.
“The most important finding is that in the large grocery stores most of the tax is being passed through,” Jones-Smith said.
At small stores, the average pass-through rate for non-taxed beverages such as diet soda and chocolate milk was 44 percent, while at supermarkets and superstores, it was 0 percent.
The researchers didn’t survey some popular stores that devote little shelf space to sugary beverages, such as Whole Foods, Trader Joe’s and PCC Community Markets.
The UW team also is studying attitudes toward the tax, impacts on sales and changes in consumption by low-income children.
State voters recently approved a ballot measure meant to block other Washington cities from also enacting soda taxes.