The Relationship Between the Soda Taxes in Berkeley, California and Mexico

Morelia, Michoac?n, Mexico

Morelia, Michoacán, Mexico

By Jasper Feinberg and Dr. Simón Barquera, PhD

Only two places in North America have enacted a soda tax: Berkeley, California and Mexico. Although Berkeley is often considered the most liberal American city, it was Mexico that first passed a soda tax, and served as inspiration to community members in Berkeley lobbying for the measure. The soda tax is an example of how laws in Mexico and Latin America can inspire effective change in the U.S.

Mexico and the U.S. are the two most obese developed nations in the world. According to 2012 data from the Organization for Economic Co-operation and Development (OECD), the adult obesity rate in the U.S. is 35.3% and 32.4% in Mexico. Several sources now report that Mexico has overtaken the U.S. in obesity. The two countries also have comparably high diabetes rates. Thus, the U.S. and Mexico face similar obesity and diabetes epidemics, and used nearly identical soda taxes to combat these issues.

The design of the two soda taxes is very similar. Both are excise taxes, meaning the distributor pays the taxes. In both locations the amount of the tax is based on the volume of soda sold, at a rate of one cent per ounce in Berkeley and one peso per liter in Mexico.

Fascinatingly, the soda tax campaigns themselves also shared certain key aspects. For instance, due to the power of industries like the dairy industry, in both countries the taxes are not levied on dairy products or drinks made in restaurants.

berkeley_soda_tax_measure_d_otu_imgThe Mexican soda tax was an important piece of evidence for the Berkeley campaign. The early success of the Mexican tax provided tangible evidence for the soda tax, and showed those who doubted the measure that such a tax could be effective.

The connection between the campaigns is especially interesting given the differences in the American and Mexican political systems. Mexico, which has a more centralized system at the national level, passed the tax in a Senate vote. Berkeley, on the other hand, enacted the tax through a local ballot measure, and thus built a diverse coalition to gain popular support. This shows a clear relationship between the two taxes despite key political differences, and proves that laws in Mexico and other Latin American countries can be used to enact parallel laws in the U.S. We must consider Latin American countries to be applicable examples in fighting certain issues in the U.S., such as obesity.

Moreover, the tax has been effective in both Berkeley and Mexico. In Mexico, initial data from the Carolina Population Center at the University of North Carolina and the Instituto Nacional de Salud Pública (Mexican National Institute of Public Health) showed a 6% average decline in purchases of taxed beverages over 2014 compared to pre-tax trends. This difference accelerated during 2014 and the reduction compared to pre-tax trends reached 12% by December 2014. The decrease was also more pronounced in low-income households, which saw a 17% decline in purchases of soda by December 2014.

In Berkeley, there were certain key differences that had the potential to reduce the effectiveness of the tax. First of all, the average discretionary income in Berkeley is much higher, and thus an increase of 10 to 20 cents in the price of a soda might not limit consumption significantly. Even that price increase does not account for producers or distributors paying the tax instead of passing the burden to consumers. Moreover, unlike in Mexico, a consumer in Berkeley could easily drive outside of Berkeley to purchase untaxed soda.

Yet, according to the latest statistics published in the American Journal of Public Health, prices of sugar sweetened beverages have increased in Berkeley, with approximately 70% of the tax being passed on to consumers. Furthermore, both taxes succeeded in raising national and local awareness for the obesity epidemics in the two countries. These two factors lead to decreased consumption in Mexico and are likely to cause comparable decreases in Berkeley.

The fact that both taxes had similar effects shows that despite economic and social differences between the U.S. and Mexico, nearly identical policies can successfully combat an issue shared by the two countries. This reveals the potential for increased exchange between Mexico, and other parts of Latin America, and the U.S. when planning and advocating for legislation.

Globalization is producing similar situations in the U.S. and Latin America beyond the obesity epidemic, such as widening economic inequality. Therefore, further opportunities exist for mutual learning from campaigns across borders. Just as the soda tax was a model applied here in Berkeley, we should be alert for other such models to emulate.

Jasper Feinberg is a student at Berkeley High School who interned at the Instituto Nacional de Salud Pública in Mexico and volunteered with the Yes on D campaign in Berkeley. Dr. Simón Barquera, PhD, is a director at the Instituto Nacional de Salud Pública focusing on the effectiveness of the Mexican soda tax.

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