Would soda tax affect WV health, workforce participation?

CHARLESTON, W.Va. — West Virginia often finds itself at the bottom of state health rankings and the labor force participation rate, two categories seen as vital for a state’s economy.

Supporters of Gov. Jim Justice’s proposed soda tax believe it could help West Virginia get out of last place. Opponents, the most vocal of which are directly involved in the beverage industry, believe these rankings wouldn’t budge if it is implemented.

Although still rare nationwide, taxes on sugary drinks have been recently implemented in Berkeley, California, and Philadelphia. Soda taxes in Oakland and San Francisco will go into effect within the next year.

The beverage industry has consistently opposed these measures, especially in Philadelphia. Supermarkets and distributors in the city have reported a 30 to 50 percent drop in beverage sales and are planning for layoffs, according to the Philadelphia Inquirer. City officials said the claims may just be a way to make other cities fearful of passing their own soda tax.

Ralph Winter, secretary-treasurer of Teamsters Local 175 in Charleston, which represents beverage industry workers, said layoffs in the beverage industry could very well happen in West Virginia if the soda tax passes.

“You’ll get some revenue, but you’ll lose jobs, and then we’ll have circled around to right back where we started,” he said.

Justice’s recently proposed budget plan included a 1-cent-per-ounce tax on sugary soft drinks to raise $85 million as the state continues to battle a budget shortfall. The plan, which Justice called the “Better Health Initiative for West Virginia,” also called for a 50-cent-per-pack tax increase on cigarettes to raise $47.8 million.

West Virginia already has a form of soda tax — an excise tax of 1 cent included in nearly every non-alcoholic packaged beverage. Revenue goes toward the West Virginia University School of Medicine. The tax has been in place since 1951.

The excise tax applies to manufacturers, distributors, wholesalers and retailers. Only Arkansas has a similar excise tax that affects all four levels of production, according to the Council of State Governments, but it is a larger tax at 2 cents per 12 ounces.

Winter said the union has agreed with many of Justice’s proposals, but the new soda tax “would be a job killer” and is an unnecessary target on the industry’s back.

“If one of your biggest problems is health, then why go just after soda?” he asked. “Why are they not taxing candy, too, if this is the argument?”

The union represents roughly 400 employees of the beverage industry, who have jobs in areas such as pre-sale merchandising, truck driving and warehouse operations.

Statewide, the West Virginia Beverage Association estimates nearly 1,400 people are employed directly by the industry, with an additional 4,100 jobs created indirectly in areas like retail and grocery. Much of the bottled water supplied following deadly flooding in June 2016 was provided by Pepsi and Coca- Cola, Winter noted.

Proponents argue the tax has clear and obvious benefits — it’s another way for the state to chip away at the budget shortage and an incentive for West Virginians to consume healthier beverages.

“If they aren’t buying soda, they’re buying bottled water,” said Ted Boettner, executive director of the West Virginia Center on Budget & Policy. “It’s an example of the substitution effect, which is obviously a great thing.”

Boettner said the state would be much better off economically in the long run if its workforce was healthier. He referenced a 2016 presentation on the soda tax by the Center on Budget and Policy, which estimated $1.9 billion was spent on direct medical expenses for diabetes in the state in 2012.

The CHOICES project, a public health research group spearheaded by Harvard University, said in a 2016 policy briefing that a higher excise tax on soda in West Virginia would “prevent thousands of cases of childhood and adult obesity, prevent new cases of diabetes, increase healthy life years and save more in future health care costs than it costs to implement.”

Less soda being consumed would lead to a healthier and more productive workforce, Boettner said.

“One of the reasons we have the lowest workforce production is that we have an unhealthy population,” he said. “It’s one of the biggest impediments to economic growth.”

Will Swann, general counsel to the West Virginia Beverage Association, said it’s not a guarantee all soda drinkers in the state would switch to water or diet soda. If they aren’t willing to pay the extra tax, they would satisfy their craving through something else with added sugar, such as candy, he argued.

Swann added that many West Virginians aren’t too far from neighboring states, allowing them to do their shopping somewhere like Ohio or Kentucky where the tax isn’t implemented. Beverage companies considering West Virginia as a place to set up distribution offices might do the same.