Before the tax on sugar-sweetened beverages took effect on Jan. 1, officials estimated it would raise about $15 million in 2018.
Seattle has collected nearly $17 million in the first nine months of its tax on sugar-sweetened beverages, already surpassing what the city initially expected the tax would raise in its first year.
Before the so-called soda tax took effect on Jan. 1, officials estimated it would raise about $15 million in 2018.
It’s possible the tax is generating more revenue than anticipated because baseline assumptions behind the city’s estimate were flawed. It’s also possible the measure meant to discourage unhealthful choices is failing to make some people change their habits.
Though researchers have yet to complete analyses of consumption patterns, tax collections have increased as 2018 has worn on. After collecting $4.8 million in first-quarter payments and $5.9 million in second-quarter payments, Seattle now has collected $6.2 million in third-quarter payments and a total of $16.9 million, according to Julie Moore, a spokeswoman for the Finance and Administration Services department.
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Fourth-quarter payments are yet to come and some businesses file their taxes annually, rather than quarterly.
The city initially predicted its soda-tax collections would decline over time, but officials now are counting on the money to keep rolling in. The 2019 budget passed by Mayor Jenny Durkan and the City Council last month assumes the tax will raise about $21 million next year, with large annual declines “no longer expected.”
Some council members criticized Durkan for using some soda-tax proceeds to help balance the overall budget rather than exclusively for promoting healthful eating and education programs. But they ultimately approved the appropriations.
Seattle’s tax is 1.75 cents per fluid ounce on the distribution of sugary beverages, syrups and concentrates. The measure exempts diet sodas, milk drinks such as flavored lattes and beverages made by small local manufacturers.
Though the tax is being paid by distributors, they can choose to pass the tax on to supermarkets, convenience stores and restaurants, which can pass it on to customers.
Proponents said the tax would boost prices and thereby discourage people from buying sugary drinks linked to type 2 diabetes, hypertension, heart disease and tooth decay.
Opponents included some store owners and consumers, as well as unionized beverage-industry workers. Critics said the tax would disproportionately hurt people with low incomes.
Seattle is paying University of Washington researchers to study the implementation of the tax and released a baseline report in August. Most Seattle adults surveyed before the tax took effect supported it, but the measure was less popular among black and Asian respondents and people with lower incomes.
The researchers are supposed to present soon on how much the tax is driving up beverage prices. They’re also studying impacts on sales and on consumption by low-income children.
State voters recently approved a ballot measure meant to block other Washington cities from also enacting beverages taxes. The soda industry spent $20 million on the campaign for Initiative 1634, which won with 56 percent of the vote.