Cigarette taxes worked. Why not soda?
December 4, 2012By Jonathan Zimmerman, for NewsWorks
Taxes won't reduce consumption. They violate Americans' "right to choose." And they bear disproportionately on racial minorities.
Those were the claims deployed by the beverage industry to defeat proposed soda taxes in Philadelphia in 2010 and 2011. They also surfaced this past electoral season in California, where two cities rejected taxes on sugared soft drinks.
But the real forefather of these arguments was the cigarette industry, which used almost exactly the same rhetoric for a half-century to resist taxation and other regulations. And the cigarette companies were wrong then, just like the soda apologists are wrong now.
Consider Philadelphia's recent good news on smoking, which has plummeted 15 percent since 2008. Across the country, the smoking rate declined as well. And the main reason is—you guessed it—higher taxes on cigarettes.
On his 16th day of office, back in 2009, President Obama signed the biggest cigarette tax hike in American history: from 39 cents to $1.01 per pack. Overnight, prices went up went up 22 percent. And two years later, three million fewer Americans were smoking.
It's happened before. Smoking went down after Ronald Reagan signed a cigarette tax in 1982, to compensate for his tax cuts in other areas. The smoking rate also dipped after the 1992 election of Bill Clinton, who made the White House smoke-free for the first time—and tripled federal cigarette levies.
To fight back, the tobacco industry argued that taxes interfered with consumer "freedom" and "choice." One company advertisement showed a policeman pulling over an automobile and instructing the driver to "come out slowly . . . . with your cigarette above your head." Another showed a stylish woman declaring, "The smell of cigarette smoke annoys me, but not nearly as much as the government telling me what to do."
Finally, the industry also insisted that higher taxes placed an inordinate burden on poor and especially African-American communities. Starting in the 1960s, the industry had designed and marketed menthol cigarettes for black consumers; it also made charitable contributions to the Urban League, the NAACP, and the United Negro College Fund. So it built up considerable good will in parts of the black community, which joined the cigarette companies in condemning new taxes as unfair or even racist.
Never mind that the development of menthol cigarettes had its own racist rationale: in internal memoranda, industry researchers claimed that blacks would smoke menthols to mask their "genetic body odor." Privately, company officials also acknowledged the real purpose for their donations to minority organizations: to increase minority smoking.
"Clearly, the sole reason for B & W's interest in the black and Hispanic communities is the actual and potential sales of B & W products within those communities and the profitability of their sales," declared a 1984 memo by Brown and Williamson, a leading cigarette manufacturer.
Listen closely to the soda companies, and you'll hear all three of these arguments: a tax won't reduce consumption, it will harm individual freedom, and it will discriminate against minorities.
Wrong, wrong, and wrong. According to University of Illinois-Chicago economist Lisa Powell, raising the price of soda ten cents reduces consumption between 8 and 12 percent; by contrast, cigarette use declines just four percent for every 10-cent hike.
Would the soda tax interfere with personal choice? Of course. All laws and regulations limit individual choice, in some way, in order to enhance the collective good.
And a substantial soda tax would almost surely do that, by reducing obesity. According to a 2010 study by the USDA, a 20 percent hike in the cost of sugared beverages would generate an average loss of 3.8 pounds a year for adults and 4.5 pounds a year for kids.
Obesity is especially pronounced among minorities, which stand to gain the most from this reform. Like cigarette companies before them, though, soda companies continue to posture as minority advocates even as their products harm minority communities.
In 1993, a former cigarette advertising model recalled asking his bosses whether industry executives smoked. "Are you kidding?" he was told. "We reserve that right for the poor, the young, the black, and the stupid."
Let's be clear: cigarettes and soda are different products, with different properties and dangers. And not everyone who uses them is poor, minority, or uneducated.
But both products are marketed heavily in minority communities by hugely profitable companies, which denounce any effort to tax them as racist. Maybe they should pause to look in the mirror.
Jonathan Zimmerman teaches history at New York University and lives in Narberth. He is the author of "Small Wonder: The Little Red Schoolhouse in History and Memory" (Yale University Press).