On Nov 14th constituents in Berkley, CA passed a historic measure : a soda tax. Other towns have soda taxes and restrictions on soda, but this tax is part of growing trend. These “sin taxes” as they are called are not new, but they highlight the struggle that Americans have with the obesity epidemic and the issue of how to combat it.
What is unique about the soda tax in Berkley is that instead of being payed by retailers it will be paid by distributors. The soda industry and many local Berkley and California politicians strongly opposed the tax citing concerns that it would hurt business. Proponents of the tax believe it is the best way to combat the growing obesity problem.
It is unclear exactly how the tax will effect soda sales, and if it will have any effect on combating obesity. Because the tax is so small, distributors are just as likely to absorb the tax as they are to pass it on, at least according to the American Beverage Association.
At the moment, most retailers and distributors are not overly concerned. Berkley does not have a high soda drinking population, as most of the citizens are highly educated, health conscious individuals. Most of the people who do drink soda are teenagers who are unlikely to care about or be affect by the tax.
Whatever happens, it will be interesting to see if the tax is effective enough to start a trend for Financial Institutions like BRL Trust.