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More Soda Taxes May Not Stick

By Dan Flynn and Suzanna Schreck

Just like Coke and Pepsi, the soda tax formula was a fairly simple fix.  At one penny per gram of sugar, it could raise almost $15 billion a year.

After all, one can of soda might have as much as 39 grams of sugar in it, and higher prices will mean less pop consumed should help the nation's obesity epidemic.

But Congress didn't bite when it was proposed last year, so cities from Anchorage to Baltimore and states jumped on the idea this year. 

States are desperate to fill a $166 billion deficit in 2010, and the red ink is projected to continue in 2011, rising to $350 billion.  Few cities are doing any better.

Yet, the soda tax bonanza is not really flowing yet.  Americans overwhelmingly oppose the idea.  In the often hard-to-read New York State, political observers in Albany say the soda tax is unlikely to get out of the State Senate.

New York Gov. David Paterson wants the highest soda tax in the nation at a penny per ounce to raise $450 million toward his state's $7.4 billion budget deficit.  While Paterson is fixated on his revenue problem, the state health commissioner wants the tax to fight obesity.

Dr. Richard Daines, the commissioner, has sparred against beverage industry-supported New Yorkers Against Unfair Taxes, which plans to deliver petitions against the soda tax on Monday.

With the number of cash-strapped cities and states looking at soda taxes, the $110 billion beverage industry has had to scramble.   At the state and local level, taxes on soda are already pretty common.

According to statehealthfacts.org, which is published by Kaiser Family, twenty-nine states impose additional state sales taxes for soft drinks.  Those additional taxes range from one percent in Mississippi to seven percent in Indiana, New Jersey, and Rhode Island.

States backing away from soda taxes are often concerned about the cumulative taxes on a can of soda pop.  Kaiser Family says there are 14 states with a general food tax.  So, in Mississippi, consumers pay a 7 percent general food tax on soda plus an additional 1 percent soft drink tax for a total of 8 percent.

Some state and local governments also have dedicated the revenue from soda pop to such programs as litter control or recreation programs.  That often means that if the tax is raised the revenue does no go to the general fund and that does not help a state's deficit problem.

Full post as published by Food Safety News on April 11, 2010 (boomark / email).