States consider taxes on sugary sodas and candy

According to BridgingTheGap, as of Jan. 1, 2014, there were 34 states, plus the District of Columbia, that already tax sugar sweetened soda sold through stores, and 39 states plus the District of Columbia that tax the same when sold through vending machines.

In last November’s midterms, voters in Berkley, California decided that a tax on sodas and other sugary drinks (like sports and energy drinks, juices with added sugar, and syrups that go into sugary drinks at cafes) was a good idea and approved Measure D. In contrast, voters in San Francisco did not approve a comparable measure.

Now, several additional states are considering their own laws to combat the parade of "horribles" that results from too much sugar consumption, like obesity, diabetes, and spiking healthcare costs.

Connecticut

Last month, in an effort to cut childhood obesity, type 2 diabetes, hypertension, and other health problems, Rep. Candelaria of the 95th District proposed HB 5461. The bill would impose a tax of one cent per ounce on carbonated and non-carbonated soft drinks, and candies that are “high in sugar.” The proceeds would be used for three things:

1. To address childhood obesity through prevention efforts;
2. To fund municipalities throughout the state; and
3. To contribute to the Governor's Scholarship program.

The ctpost.com noted that Connecticut would be the first state to tax not just soda, but candy as well. The article also explained that the tax would fall on manufacturers and wholesalers, so would be “hidden from the consumer in store prices.”

As can be expected, health advocates support HB 5461. The ctpost.com quoted Roberta R. Friedman, director of public policy at the Rudd Center for Food Policy and Obesity, who revealed that there is a “26 percent increase risk for type 2 diabetes from drinking two servings of sugar-sweetened beverages a day, compared to drinking one serving per month.” The Rudd Center’s research shows that a 10 percent increase in price may yield an eight to 10 percent reduction in consumption.

Also predictably, industry opposes the “nanny state legislation.” Stan Sorkin, president of the Connecticut Food Association, which represents grocers and supermarkets, said the tax proposal is unacceptable: “With 20,000 new products introduced to the market each year, who is going to figure out what is candy? Who will be responsible for managing the database? Where will the tax be collected? What's next on the list of items to be taxed based on the agendas of interest groups?"

Sorkin also worries that the tax will result in the loss of sales to out-of-state stores, and a black market in soda sales.

Illinois

Illinois’ SB 1584, named Healthy Eating Active Living (HEAL), takes a similar approach to reducing sugar consumption. HEAL becomes effective July 1, 2015, and contains these two main provisions:

• A one cent per ounce tax on distributors of bottled sugar-sweetened beverages, syrups, or powders on bottled sugar-sweetened beverages sold or offered for sale to a retailer for sale in Illinois to a consumer;
• A requirement that such distributors obtain permits from the state.

98 percent of the proceeds would be deposited into the Illinois Wellness Fund to be used for wellness programs and for expanded obesity prevention and treatment services for Medicaid beneficiaries. The remaining two percent would be deposited into the Tax Compliance and Administration Fund for the administrative costs of the Department of Revenue.

The Illinois Licensed Beverage Association, which opposes the tax on the grounds that people should be able to make their own choices, anticipates that HEAL would generate more than $600 million per year.

Vermont

Vermont’s House Committee on Health Care introduced H24 in January. It imposes a two cents per ounce excise tax on distributors of sugar sweetened beverages, syrup, and powder sold in the state. H24 defines “powder” as any “ solid mixture of ingredients used in making, mixing, or compounding sugar-sweetened beverages by mixing the powder with any one or more other ingredients, including water, ice, syrup, simple syrup, syrup, fruits, vegetables, fruit juice, vegetable juice, or carbonation or other gas.”

A WCAX-TV piece highlighted both sides’ arguments: Proponents assert that the revenue would “cut into the state's rising healthcare costs by discouraging consumption.” Opponents insist that “a new tax would hurt the wallets of businesses and Vermonters struggling to make ends-meet.”