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How Big Soda Quickly Destroyed California Democracy

soda tax

Story at-a-glance -

  • Most understand the influence the pharmaceutical industry has on regulatory agencies and health care, but less is known about the influence food manufacturers have on your purchase choices
  • In an unprecedented political move, the American Beverage Association spent $7 million to put a restrictive initiative on the California ballot and then offered to pull it if the legislature would ban taxes on soda for 12 years
  • Tired of fighting soda taxes on the city level, the beverage industry moved to the state legislature and hope to enact similar laws across the country to protect their profits
  • The move banded medical and dental associations in California together. They’re now working on an initiative for the 2020 ballot, which would allow cities to make their own determination about soda taxes

By Dr. Mercola

Most people understand the influence the pharmaceutical industry has had on federal regulatory agencies and physicians. However, less is known about the influence food manufacturers, specifically the American Beverage Association (ABA), has had on your purchase choices and in state legislatures.

Marion Nestle holds a master's degree in public health from the University of California and a Ph.D. in molecular biology. She's written a number of books, including "Soda Politics: Taking on Big Soda (and Winning)," a fascinating expose revealing a wealth of information about the pervasive influence the soda industry has on communities, schools and public perception.

In an unprecedented and calculated move, the beverage industry recently took on the California state legislature to ban a tax on soda throughout the state. A fight between beverage companies and local municipalities against efforts to tax soda has been fought for more than a decade.1 Berkeley, California, first passed a tax on sodas in 2014, followed closely by Philadelphia; Cook County, Illinois; and San Francisco, Oakland and Albany, California.

These taxes severely cut into the industry's profits. In an effort to curtail public momentum without continually fighting battles at the city level, the industry took advantage of a law passed in 2014 called the Ballot Initiative Transparency Act2 and, quite literally, held the California legislature hostage.

Soda Companies Hold Legislature Hostage to Protect Profits

Groups have the ability to include a ballot initiative at the state level, which essentially bypasses the legislature and is a healthy demonstration of direct democracy in action. This is especially effective when the legislature is under the thumb of industry. However, by perverting the Ballot Initiative Transparency Act, the beverage industry held the legislation hostage.

The Act gives the legislature input into the ballot process, enabling proponents of an initiative entered on the ballot to withdraw the measure if the legislature finds a satisfactory solution. It was intended to help avoid costly ballot fights by giving the legislature more power. However, in this case, the beverage industry used it to get exactly what they wanted.

In the past, the soda industry has spent a lot of money to rally local businesses and shoot down any move toward enacting a soda tax in individual cities. However, when Berkeley, California, passed the first tax, followed closely by eight other communities, the industry realized it needed a new approach.

Their strategy began by spending $7 million3 to get an initiative on the ballot in November 2018 to prevent local communities from raising taxes without first getting supermajority approval from at least two-thirds of the voters or an elected body.4

This two-thirds supermajority threshold included tax measures passed by city governments and any citywide initiatives.5 This would have damaged local budgeting and cost millions of dollars, making it exceedingly difficult for cities to pay for public services such as police, fire and transit. Next, the industry approached lawmakers and proposed the legislature pass a bill to ban taxes on soda and food for 12 years. In exchange the industry would drop the initiative on the November ballot.

Scott Wiener, state senator representing San Francisco, commented on their tactic, saying,6 "They sent us a ransom note that they would drop this horrible ballot measure if we put a 12-year moratorium on local soda taxes. It's a classic case of picking your poison. The soda industry has gone completely rogue."

In another interview, Wiener said,7 "[The industry] is aiming basically a nuclear weapon at governing in California and saying if you don't do what we want, we're going to pull the trigger and you are not going to be able to fund basic government services."

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The Beverage Industry Changed Tactics as Taxes Cut Profits

Past tax measures added a penny per ounce for each drink sold. Supporters said they took inspiration from the fight against Big Tobacco, which enjoyed success by imposing taxes on cigarettes to curb consumption.8 Soft drink sales were already on the decline as more consumers switched to bottled water. These taxes were seen as a threat by the ABA to their core product, which they took seriously and spent $38 million opposing in ballot proposals. However, they lost each one.

Research from Mexico, where national taxes on sugar drinks and junk foods were enacted in 2013, found sales declined particularly among low-income populations, who tended to drink more soda.9 Research in Berkeley10 found a similar trend after soda taxes were enacted there. With the realization that as more cities enacted soda taxes, revenue would decline further and faster, the beverage industry decided to change venues, moving toward enacting new state laws to protect their profits.

Several lawmakers reported they opposed the measure of banning soft drink taxes but felt obliged to support it since the effects of a broader ballot initiative could have created significant infrastructural problems in California cities. Although this law does not overturn taxes enacted before 2018, it does prevent any new ones.11

Once announced, the American Heart Association, the American Diabetes Association, the American Cancer Society and more than 20 other health groups issued a joint statement asking Governor Jerry Brown to oppose it. Nancy Brown, chief executive of the American Heart Association, commented,12 "We were disappointed that the American Beverage Association and their member companies went to such great lengths to take away the right of Californians to vote for better health."

Beverage Industry Switches Sides

Governor Brown had avoided taking a position until he signed the bill into law. However, critics believe a photo13 of him posing with executives from the ABA and executives from several soda companies during a recent private dinner at the governor's mansion was indicative of his position. During the process of fighting taxes on their products the industry has remained adamant drink consumption does not increase obesity or contribute to Type 2 diabetes.

They believe their views simply reflect their desire to protect consumers, as taxes on drinks reportedly represent an unfair burden to their consumers, despite the probability that reduced consumption would positively influence childhood obesity and the development of Type 2 diabetes. The move in California is part of the beverage Industry's national strategy to fight local soda taxes at a state level, thus reducing their expenditure to protect their profits.

Kelly Brownell, dean of the Sanford School of Public Policy at Duke University, commented on the beverage industry's take in the past years on government interference in capitalism that has apparently depended on which side of the line the industry fell, saying,14 "The irony is that the soda companies screamed very loudly about government overreach when soda taxes began to get passed. But now they are looking for the ultimate government overreach when it works in their favor."

Beverage Industry Borrowed Big Tobacco Tactic

Franco Ripple, spokesman for the Campaign to Defend Local Solutions, a group founded last year to oppose state laws limiting local autonomy, characterized the movement of the beverage industry in California, saying:15 "It's a little bit like, instead of playing a game of whack-a-mole, you could just put a sheet of plywood over all the holes." Although some state legislators have seen soda taxes as a means of increasing revenue to support public services, others have fought for the taxes as a tool to fight obesity.

However, the beverage industry publicly insists these taxes place an unfair burden on poor and minority populations. This single strategy was initially undertaken by the tobacco industry and used successfully in the early years as legislators fought to impose taxes on tobacco products.

A paper published in the American Journal of Public Health16 was led by Dr. Donna Shelley, nicotine addiction specialist, and founder and director of the NYU Langone Health Tobacco Cessation Program at Perlmutter Cancer Center. The researchers identified parallels between the tobacco and the beverage industry's strategies to limit taxation on their products, preventing a reduction in their profits.

Research into documents from the tobacco industry revealed a three-pronged approach used to solidify relationships with minority communities as both consumers and supporters of their policy agenda.17

Information from marketing research was used to identify values and then leveraged to increase the desirability and image of their product in their target groups. They then curried favor using large financial gifts to minority organizations hoping to diffuse opposition and engage the organization to advance and defend the industries policy.

The researchers suggest the lessons learned from tobacco control demonstrate the importance of implementing policy changes that place restrictions on sugary drink sales rather than waiting for a comprehensive solution to the obesity problem. They wrote:18

"Under Mayor Bloomberg's leadership, NYC has promoted an evidence-based policy agenda to address the threat that the rise in obesity poses to the public's health, but in a way that has garnered criticism from minority organizations, thus limiting the overall impact.

The key weapons in the battle against smoking, and likely obesity, are public policies. These policies can only advance with the support of organizations whose constituents are most impacted by the health risks these policies are meant to address."

Governmental Agencies Also Under Big Soda Umbrella

While state legislators were caving under the pressure of the beverage industry's ransom demands to pull their ballot initiative, CrossFit was exposing conflicts of interest within the National Institutes of Health (NIH) and the Centers for Disease Control and Prevention (CDC),19 as both organizations failed to disclose sources and amounts of donations they had received tied to the beverage industry.

CrossFit uncovered the evidence as part of an ongoing investigation into the influence the beverage industry has on health sciences and research.

Led by Greg Glassman, founder and sole owner of CrossFit, the investigation uncovered noncompliance creating a conflict of interest between industry partners and the CDC and NIH. Although required by law to produce a report disclosing amounts and sources of the donations they received, each foundation had omitted information uncovered in the investigation. Russ Greene, CrossFit's director of government relations and research, said:20

"Under his leadership, we've tracked the soda industry's donations and use of proxy groups. We looked over the CDC Foundation and FNIH's disclosures and found they weren't even close to following the law. Annually reporting the sources, amounts and restrictions of each grant they receive — transparency — is the first step in making sure there's no undue influence on government science and policy."

Glassman's campaign to drive big soda out of the sport and health sciences field began in 2013,21 when a study published by the National Strength and Conditioning Association (NSCA) found greater aerobic and body composition improvements in those using CrossFit. However, it also suggested a higher rate of injury. Glassman fought to get the data supporting the research and found the injury data was flawed.

The journal retracted the paper in 2017 and the lead researcher subsequently resigned his position at Ohio State University. During this process, Glassman noted the NSCA was partly funded by PepsiCo. This prompted him to look deeper, finding soda money was supporting training organizations, health nonprofits, medical organizations, diabetes foundations, and even the CDC and NIH.22

Health Advocates Preparing for Battle to Reduce 12-Year 'Prison Sentence'

Within days of the legislative vote, major health care groups announced they would pursue a statewide soda tax initiative for the 2020 ballot. The revenue generated would pay for public health programs designed to combat and prevent diabetes and obesity. While city taxes had been 1 cent per fluid ounce, the new proposed tax will be 2 cents per fluid ounce, which will mean an additional 24 cents on the cost of a 12-ounce can, or $1.34 for a 2-liter bottle.23

Within minutes after the bill was signed, the initiative requiring a supermajority to pass any newly proposed taxes was pulled from the ballot. While frustrating, it appeared to prod the medical and dental associations in California to respond with a promise of an initiative they hope will raise between $1.7 billion and $1.9 billion. While the tax is double what was previously passed, it will not apply to drinks with no added sugar or in which milk is the primary ingredient.

Gov. Brown's statement after the bill signing lacked specifics:24 "We will be relentless in our work with communities across the state to improve public health through a statewide tax, and to restore the rights of Californians to vote for what they believe best supports health in their state."

Bill Monning, Senate majority leader who voted against the bill, called the passage "unprecedented."25 The move also motivated lawmakers to redouble their efforts to curb consumption of sugar drinks, and Monning pointed out the Senate health committee had considered and voted in favor of a bill requiring warning labels on drinks that contributed to various health problems.

Take Control of Your Health

Sugar changes your metabolism and hides under many different names in processed foods. The sugar industry has long known consumption leads to poor health but hid incriminating data to protect their profits. However, you may take control of your health by making smart nutritional choices and eliminating or severely limiting processed foods in your diet.

Damage to your metabolism and mitochondria from sugar leads to heart disease, cancer and Alzheimer's disease. While eating whole, organic foods is the best thing you can do for your health, when you do pick up package foods, read the labels carefully so you make an informed decision about the amount of sugar you are adding to your diet.

Also remember food labels list ingredients in the order of the amount. In other words, there is more of the first ingredient in the product than the second, and so forth. When looking at the amount of sugar you're considering, remember if sugar is in the fourth, sixth, ninth and 11th positions, the combined total may well put it in the first or second position.

To help you recognize how much sugar you may be purchasing, you'll find a list of some of the more common names of sugar used on product labels in my previous article, "Research Finds Sugar Changes Metabolism in Even the Healthiest of People."