3-12-15 – Sugar-Sweetened Beverage Tax: 2 Cents an Ounce is Just the Beginning

by Shayne Spence

Well, it’s back. The House Ways and Means and Health Care Committees are considering a new tax on sugar-sweetened beverages yet again, following a similar failed proposal in 2013. H. 235, proposed by Reps. George Till and Alison Clarkson, would impose a 2-cent per ounce tax on any beverage with added sugar, from sweetened iced tea to two-liters of Coca-Cola (excluding dairy products. Dairy lobby, you know).

Jim Harrison of the Vermont Grocers & Retailers Association outlined what the 2 cents per ounce tax would mean for a number of popular products (SEE VIDEO). A 20 oz bottle of Coca-Cola would have its price increased by 40 cents, a 22% increase in the cost of the product. The tax levels are even more obscene on drinks sold in larger volumes. Arizona Iced Tea, which is sold in gallon jugs at most grocery stores for $2.99, would see an increase in price of $2.56 with a 2-cent tax, or a 46% increase. Ocean Spray juice, which is sold by the half-gallon at Walmart for $2.28, or 3.6 cents per ounce, would see a $1.28 increase, or a 35% increase.

But, have no illusions. This is just the beginning.

Proponents of the tax say that this tax will improve health by reducing sugar consumption and, therefore, rising obesity rates. In doing so, they point to the success of tobacco taxes.

Well, if tobacco taxes are the example, let’s examine their history for a moment.

In 1995, the tax on tobacco products in Vermont only applied to cigarettes (44¢ a pack). Since then, the tax rate has seen six increases, and expansions to include smokeless tobacco products and, more recently, e-cigarettes and vapor cartridges. Today the tax on a pack of cigarettes is $2.75 a pack – a 625 percent increase!

If a new sugar tax is passed this year and follows in the tobacco tax’s footsteps, that tax on the 20 ounce bottle of Coke would grow to $2.50. The tax on a jug of Arizona Iced Tea would be 16 bucks! And we could expect the sugar tax to creep into other products with sugar content, such as candy, baked goods, or you name it.

According to testimony by University of Illinois professor Frank Chaloupka, who is in favor of the tax, we can expect the sugar-sweetened beverage tax to increase. The professor admitted that in order to continue generating the projected amount of revenue, the tax rate per ounce would have to increase regularly in order to keep pace with inflation.

This legislation is not really about health. It’s about revenue. The state is dealing with a $100 million deficit, and it wants money. So they pass this tax. What happens next year when we have another deficit? (Already projected at nearly $50 million for FY17 (VT Digger 3-12-15)) You raise the tax. Or expand it to cookies. And then the deficit in FY18…

This proposed tax would just be another tax passed onto the consumer, and it has the potential to increase the cost of goods by a significant amount in its proposed form, much less with any future increases. Nobody will argue that obesity is not a detriment to public health, but it should be obvious that this will only serve to increase the price of a trip to the grocery store and fill the state coffers.

Shayne Spence is the Outreach and Development Coordinator for the Ethan Allen Institute.

{ 2 comments… read them below or add one }

Jim Bulmer March 14, 2015 at 2:08 pm

Question. Based on the projected revenue to be derived from the sugar tax, the funds most certainly will be committed to funding some crazy project. The money gets spent, people refuse to pay the outlandish cost for the taxed beverage, live the “healthy” lives the legislation is proported to encourage and shaz zam, the funds dry up. What new tax scheme will these clowns foist on Vermonters to replace the committed funds? Just a question.

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Doug Richmond, Underhill March 14, 2015 at 4:27 pm

While the legislature is so anxious to regulate our ‘everything, for our benefit’, have you heard the howl from legislators because the cafeteria there has adopted a mandatory ‘healthy’ menu of items, forbidding many/most of the most popular sugary snacks ‘for their benefit !!?!!”. Legislators cry FOUL !!

Blatant hypocracy, but NOT unexpected. Let them eat the trash our kids have to eat, or throw away, under the Michelle O”s personally imposed school lunch mandates.

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