The proposed tax at 2-cents-per-ounce (the same rate as the soda tax in Boulder, Colorado) would have included a variety of beverages such as soda, sports drinks, iced tea, and energy drinks. Opponents said the tax would have added an extra $1.36 to a 2 liter bottle of soda.
Residents in the New Mexico capital voted against the tax, with 11,533 votes against and 8,382 votes in favor.
Revenue from the tax would have gone towards early childhood education, but the American Beverage Association says the outcome of the vote sends a 'clear message' that there are better ways to fund community programs than a discriminatory tax.
Elsewhere in the US, Philadelphia, San Francisco, Boulder and Cook County have passed soda taxes, while taxes are also under discussion in other areas.
Calling for the tax, Santa Fe Mayor Javier Gonzales said revenue would go to early childhood education. Supporters of the tax included billionaire Michael Bloomberg, the former New York mayor who tried unsuccessfully to ban large sodas, and the American Heart and Stroke Associations.
Revenue from the beverage tax in Santa Fe – predicted to be $7.7m a year - would have been used to expand preschool to 1,000 children from families most in need under ‘Pre-K for Santa Fe’.
But opponents said the beverage tax would be the highest of its kind in the US, adding that it would place a larger share of the tax burden on residents least capable of paying. They also argued that people would eat and shop outside of city lines to avoid the tax, hurting local businesses.
Welcoming Santa Fe’s vote against a beverage tax, the ‘Better Way for Santa Fe & Pre-K’ campaign group told supporters on its Facebook page: “Thanks to your hard work and dedication, Santa Fe made the choice to support hardworking families, small businesses, and jobs – helping to improve the economic outlook for our city.”
The American Beverage Association also welcomed the outcome of the vote, saying: "The people of Santa Fe have sent a clear message: there are better ways to fund programs important to the community rather than a discriminatory tax. Taxes like this one threaten jobs and burden small, local businesses and working-class families the most – not just in Santa Fe but in every community.
"Santa Fe voters, like the people of Philadelphia, are aware of the impacts caused by significant taxes on hundreds of beverages at grocery stores and restaurants, including job losses. Santa Feans did not want to see that happen in their hometown."
The American Beverage Association has put more than $1.3m from the soft drink industry into battling the tax, while Bloomberg contributed $1.1m to the pro-tax campaign, according to Associated Press.