Soda tax foes reek of tobacco

By Jonathan Zimmerman

Taxes won't reduce consumption. They violate Americans' "right to choose." And they put a disproportionate burden 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 during the past election season in California, where two cities rejected taxes on sugary soft drinks.

But the forefather of these arguments is the cigarette industry, which used almost exactly the same rhetoric for a half-century to resist taxation and regulation. The cigarette companies were wrong then - just as the soda apologists are wrong now.

Consider Philadelphia's recent good news on smoking, which has plummeted 15 percent since 2008. Smoking rates declined across the country as well. The main reason is - you guessed it - higher taxes on cigarettes.

Shortly after he took office, President Obama signed the biggest hike in the federal cigarette tax in history: from 39 cents to $1.01 per pack. Overnight, cigarette prices went up an average of 22 percent. Two years later, three million fewer Americans were smoking.

It's happened before. After Ronald Reagan signed a cigarette tax in 1982 to compensate for tax cuts in other areas, smoking went down. The 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 interfere with consumer "freedom" and "choice." One company advertisement showed a policeman pulling over a car 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."

The industry also insisted that higher taxes place an inordinate burden on poor and especially African American communities. Starting in the 1960s, the industry had marketed menthol cigarettes to black consumers. It had also made charitable contributions to the Urban League, the NAACP, and the United Negro College Fund. That built considerable goodwill in the black community, where some members 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 of their donations to minority organizations: to increase minority smoking. A 1984 memo at Brown & Williamson, a leading cigarette manufacturer, noted, "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."

Listen closely to the soda companies, and you'll hear the same arguments that the cigarette industry made: a tax wouldn't reduce consumption; it would infringe on individual freedom; and it would discriminate against minorities.

Wrong, wrong, and wrong. According to University of Illinois at Chicago economist Lisa Powell, raising the price of soda 10 cents reduces consumption by 8 to 12 percent. By contrast, cigarette use declines just 4 percent for every 10-cent tax hike.

Would the soda tax interfere with personal choice? Of course. Most laws and regulations limit individual choice in some way in an effort to serve the collective good.

And a substantial soda tax would almost surely do that by reducing obesity. According to a 2010 study by the U.S. Department of Agriculture, a 20 percent hike in the cost of sugary beverages would lead to a drop in caloric intake equivalent to 3.8 pounds a year among adults and 4.5 pounds a year among kids.

Obesity is especially prevalent among minorities, who stand to gain the most from such tax increases. 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 are marketed heavily in minority communities by hugely profitable companies that denounce any effort to tax them as racist. Maybe they should pause to look in the mirror.