Posts Tagged: Taxes
Are California soda taxes effective?
Study finds that the taxes raise revenues, but may not decrease sales
California is home to four of the eight active soda taxes in the United States, but are these policies successfully decreasing the consumption of sugary beverages in these cities? New research out of UC Davis suggests that, in most cases, these soda taxes did not reduce retail sales. Further, while they successfully raised revenues to fund programs to reduce sugary beverage consumption and mitigate their negative health effects, a disproportionate amount of this revenue was generated from lower-income households.
With over $2 trillion in annual worldwide health-care costs resulting from the obesity epidemic, many municipalities are searching for ways to reduce its adverse effects on their citizens and economies. The World Health Organization (WHO) recommends a tax on sugar-sweetened beverages (e.g., sodas) to reduce the consumption of sugary beverages and prevent obesity-associated diseases. To assess whether this approach has been successful at a local level in California, UC Davis economists analyzed the price and sales effects of a one-cent-per-fluid-ounce sales tax on sugar-sweetened beverages taxes in three Bay Area cities: Berkeley, Oakland and San Francisco.
Co-author of the study Richard Sexton, distinguished professor in the Department of Agricultural and Resource Economics at UC Davis, said they found that “California soda taxes in the Bay Area communities have generally had little impact on sales of sugary beverages.”
There are a number of reasons why these taxes may not significantly affect the purchasing decisions of California consumers. Since the taxes are imposed on distributors, an important consideration is how much of the tax is actually passed along to consumers. Several factors could lead to very little of the final tax burden falling on consumers, including fixed-price contracts between distributors and retailers, and retailers' reluctance to pass forward price increases to avoid alienating consumers.
When the authors explored this “pass-through rate,” they found that, in most cases, it was fairly low. However, in the fourth and fifth years after the implementation of the Berkeley tax (home of the first U.S. soda tax), they did see pass-through rates of 45% and 77%, respectively, as well as significant reductions in retail sales on average. This may mean that it requires a longer time for these taxes to be passed forward and affect behavior. Or, it may have been influenced by the implementation of similar taxes in surrounding areas a couple of years later, suggesting that these taxes are more effective when implemented over a larger area to prevent customers from shopping outside the taxed region.
Since low-income households consume more sugar-sweetened beverages than higher-income households, they are often considered more at risk for the detrimental effects of high soda consumption. Thus, the authors also wanted to assess whether there was a difference in how these taxes affected the price and volume of sales in low-, middle-, and high-income neighborhoods.
Kristin Kiesel, who also serves as the co-director of the Diversity and Inclusion in Research, Education, and Career Training (DIRECT) program, noted that “California's soda taxes appear to hit low-income consumers the hardest. There is little evidence that lower-income households have reduced purchases of sugary beverages in response to these taxes, meaning they are bearing the burden of the portion of the tax passed forward to retail without gaining health benefits.”
To learn more about how sugar-sweetened beverage taxes have impacted California consumers, read the full article “How Well Are California's Sugar-Sweetened Beverage Taxes Working?” by Lang, Kiesel and Sexton, published by UC Giannini Foundation of Agricultural Economics in ARE Update 26(3): 1–4, free online at https://giannini.ucop.edu/filer/file/1676490133/20606.
ARE Update is a bimonthly magazine published by the Giannini Foundation of Agricultural Economics to educate policymakers and agribusiness professionals about new research or analysis of important topics in agricultural and resource economics. Articles are written by Giannini Foundation members, including University of California faculty and Cooperative Extension specialists in agricultural and resource economics, and university graduate students. Learn more about the Giannini Foundation and its publications at https://giannini.ucop.edu.
San Francisco Establishes California’s First Urban Agriculture Incentive Zone
On August 7, San Francisco officially became the first city in California to establish an urban agriculture incentive zone. Following passage of a law introduced by Supervisor David Chiu and unanimously supported by the Board of Supervisors and Mayor, owners of vacant property within San Francisco will now be able to apply for a property tax reduction in exchange for committing their land to urban agricultural use for at least five years. San Francisco's new law is the first local implementation of Assembly Bill 551 since that state bill went into effect at the start of this year.
The San Francisco legislation has a number of main features:
The entirety of San Francisco would be considered an urban agriculture incentive zone, which means that that any parcel that met the eligibility requirements set out in state and local law could receive a reduced property tax assessment.
- The Planning Department would be responsible for certifying a parcel's eligibility based on its size, existing structures, and access to water.
- If a parcel is eligible, the property owner would submit an application to the Agricultural Commissioner explaining the plans for agricultural use of the site. The proposal goes above and beyond the state's minimum requirements by requiring the property owner to demonstrate through their plans that the farming or gardening on the property would have some interface with the public through either distribution or sales of food; educational activities such as classes and workshops; or that that site is being used as a community garden with members other than the property owners' family.
- The Agricultural Commissioner would be responsible for both reviewing the plans in the application as well as conducting annual site inspections after a contract is signed to ensure that the site is used solely for agricultural purposes.
- The Assessor-Recorder would be responsible for calculating the change in property taxes and providing that information to the Agricultural Commissioner and property owner.
- If an application is approved, the property owner would sign a contract with specific terms, to be enforced by the Agricultural Commissioner.
- The legislation explicitly allows the agencies involved to establish fees to process the initial application and defray the costs of annual inspections.
The legislation also has a number of safeguards to prevent abuse:
- Any proposed contract that would reduce property tax revenue to the city by $25,000 or more each year; result in five contiguous acres under contract; or would increase total revenue loss to the city above $250,000 annually for all properties under contract would automatically be sent to the Board of Supervisors for review.
- If a contract is cancelled by either the property owner or by the city because the property owner is found to be in breach of contract prior to the expiration of its five year term, the landowner would be required to pay the city all back taxes, with interest (as determined by the Assessor-Recorder).
- To provide an additional check and balance for the program, the Board of Supervisors has a ten-day window after receiving the Agricultural Commissioner's list of recommended contracts to request a hearing to review any contract. If the Board does not request a hearing, a recommended contract can be approved administratively.
The final details of the application and contract itself are now being worked out by city agencies so that property owners can apply by the October 1, 2014 deadline. While San Francisco has a limited amount of vacant land, local advocates are hopeful that the law will support a number of projects in the city while also inspiring other cities and counties across the state to establish urban agriculture incentive zones. It's one tool that has great potential for supporting greater land access and land tenure for urban farmers and gardeners so that more people in the state can benefit from urban agriculture.
Learn more:
- Read San Francisco's Urban Agriculture Incentive Zone ordinance
- Read UC ANR's Guide to Implementing the Urban Agriculture Incentive Zones Act (AB 551)
- Anyone in San Francisco interested in applying for an urban agriculture incentive zone contract should contact the city's Urban Agriculture Program Coordinator
- Watch a KPIX news piece about the ordinance
Eli Zigas is the Food Systems and Urban Agriculture Program Manager at SPUR (San Francisco Planning and Urban Research).
tenderloin peoples garden tomato Sergio Ruiz
Unauthorized immigrants pay taxes
Tax Day is an appropriate time to underscore the fact that unauthorized immigrants pay taxes. To do just that, the Immigration Policy Center published a brief showing the contributions these immigrants make as taxpayers.
According to the Department of Homeland Security estimates, 60 percent (three-fifths) of the unauthorized population was from Mexico as of 2010. The other top countries of origin were El Salvador (6 percent), Guatemala (5 percent), Honduras (3 percent), and the Philippines (3 percent)
The unauthorized, like everyone else in the United States, pay sales taxes. They also pay property taxes—even if they rent. At least half of unauthorized immigrants pay income taxes. Add this all up and it amounts to billions in revenue to state and local governments. The Institute for Taxation and Economic Policy (ITEP) has estimated the state and local taxes paid in 2010 by households that are headed by unauthorized immigrants. These households may include members who are U.S. citizens or legal immigrants. Collectively, these households paid $11.2 billion in state and local taxes. That included $1.2 billion in personal income taxes, $1.6 billion in property taxes, and $8.4 billion in sales taxes.
The states receiving the most tax revenue from households headed by unauthorized immigrants were California ($2.7 billion), Texas ($1.6 billion), Florida ($806.8 million), New York ($662.4 million), and Illinois ($499.2 million).Source: Immigration Policy Center, “Unauthorized Immigrants Pay Taxes, Too,” April 18, 2011.