Sugar-sweetened drink tax: Effective deterrent or unfair cost?

soda machine

Creative Commons photo/Flickr user Redfishboat (Mick O)

Though Vermont has been ranked the healthiest state in the nation for the fourth year in a row, according to United Health Group, statistics show that Green Mountain residents are getting fatter faster than ever and the costs associated with obesity are rising.

Obesity, as Harry Chen, the commissioner of the Department of Health, put it this week, is an “epidemic” in Vermont. “It’s the No. 2 modifiable risk factor for death, and there is a tremendous cost associated with it to the health care system,” Chen told reporters at the governor’s weekly press conference on Tuesday.

The percentage of Vermonters who are obese has more than doubled over the last 22 years, according to the United report. About 10.7 percent of Vermonters were obese in 1990; now 25.4 percent of the overall population of the state is severely overweight.

Overweight Vermonters are more susceptible to an array of medical problems, including asthma, diabetes, cancer and heart diseases. Estimated medical spending for obesity related diseases in 2010 dollars was $163 million, according to a UVM report.

While health advocates and state officials agree that obesity has reached epidemic proportions in Vermont, and the costs to taxpayers are escalating, they disagree on what to do about it. Health advocates want to impose an excise tax on sugar-sweetened beverages to curb consumption rates among children; the state’s leading politicians oppose such a tax because they say it would be regressive.

Lobbyists for grocers and the beverage industry oppose the tax proposal, and they say it will do nothing to change consumer behavior.

Tax on sugary drinks seen as a deterrent

The Alliance for a Healthier Vermont, which represents 35 organizations including the Vermont Medical Society, Fletcher Allen Health Care and the American Heart Association, says one of the biggest risk factors for childhood obesity is consumption of sugary drinks.

The alliance wants the state to place a penny per ounce tax on sugar-sweetened beverages as a way of deterring Vermonters, and children in particular, from consuming so much soda, sweetened tea and energy drinks. Flavored milk and juices would be exempted.

Americans drink twice as much soda and sugary drinks now as they did 30 years ago. Children are consuming between 41 and 108 gallons of the beverages a year, according to the alliance. In 2009, Medicaid paid for surgical tooth extractions for 421 Vermont children under the age of 5 at a cost of $2.2 million.

A 1 cent an ounce excise tax or a 10 percent increase in cost for a 12 ounce can of soda or other sugary drinks could be the most significant measure against childhood obesity, according to a March 2010 Health Affairs article. The slight increase in price generated by the excise tax would reduce consumption by 8 percent.

The tax would raise about $27 million in Vermont based on figures from the Yale Rudd Center for Food and Policy. The money could be used to pay for an anti-obesity campaign, much like the anti-tobacco public awareness advertising that health advocates have successfully used to deter Americans from smoking, according to Tina Zuk, of the American Heart Association.

Zuk said the $27 million from the sugar sweetened beverage tax could also be used to hold low-income Vermonters harmless who otherwise might face significant increases in out-of-pocket health care costs and premiums when the exchange begins and Catamount and VHAP go away in 2014.

“The governor has stated that he doesn’t believe the state has a revenue source for this $15 million to $18 million expense,” Zuk said. “But the sugar sweetened beverage tax could provide a win-win on two fronts – reducing obesity and ensuring that low- to middle-income Vermonters have affordable health care.”

Though excise taxes have been imposed on alcohol, tobacco and gasoline at the wholesale level, the penny per ounce excise tax proposed by the alliance would be the first such levy on food in Vermont, and, some experts say, in the nation.

Democratic leaders unenthusiastic

Excise tax legislation on sugar-sweetened beverages is now being drafted at the behest of Rep. Dave Sharpe, a vice chair of the House Ways and Means Committee.

Rep. Dave Sharpe, a vice chair of the House Ways and Means Committee, is drafting legislation for a sugar-sweetened beverage tax.

Sharpe says the penny per ounce proposal could be an effective deterrent because consumers would have an opportunity to see the difference in the per unit shelf price between, say a bottle of water and a container of Coca-Cola.

The Democrat from Bristol is aware that the proposal could be doomed at the outset, as the state’s political leaders, all Democrats, are lining up against the idea of a penny an ounce excise tax on sugary drinks just like they did in 2010.

Sharpe is unfazed by opposition from members of his own party.

“It’s like the smoking thing,” Sharpe said. “It took a long time for people to accept smoking is a bad habit and it ended up costing the health care system millions. When that realization came to fruition, it became easier to pass bills.”

Gov. Peter Shumlin and John Campbell, the Senate president pro tem, adamantly oppose a tax on sugar-sweetened beverages. Shap Smith, the House Speaker, says he has “real reservations” about the proposal because he is concerned “about how it would be implemented and its regressivity.” All three men, who have worked hard to burnish their fiscal conservative credentials, have pledged not to raise “broad based taxes,” including sales and use, rooms and meals and income taxes. (Meanwhile, provider taxes on health care institutions, fees on Vermont Yankee and other revenue-raising maneuvers sailed through the legislative process in the last biennium.)

At the governor’s press conference on Tuesday, Chen, the state’s health commissioner, stopped short of endorsing a plan to tax the sugary drinks.

“I certainly would like to see sugar-sweetened beverages taken out of schools,” Chen said. “As far as a tax policy goes, that’s certainly a question we’d have to decide, but I certainly think that the less sugar-sweetened beverages people drink the better. I think the policy issues are a different issue entirely.”

Lest there be any question on that point, the governor quickly stepped into the fray. Shumlin told reporters he wanted to “just to make sure we answered the question accurately.” He explained that he sees obesity as a national problem, and he pointed out that Vermont’s rate of obesity growth is slower than most other states.

“My feeling about taxing to get outcomes in this area are pretty clear,” Shumlin said. “I believe that the best way you can deal with questions of obesity is by education and ensuring that we get to both kids and parents to get them the information they need. We can make great progress, and that’s where I’d start. One of the challenges with taxing sugar as a method of reducing consumption is it’s a very regressive tax, it puts a tax on those who can least afford it to pay the most. So I would suggest that we start with education.”

Chen then proceeded to solidify his stance: “A sugar-sweetened beverage tax clearly is not a magic bullet; we’re going to have to attack this from a broad cultural perspective.”

Dr. Harry Chen

Vermont Department of Health Commissioner Harry Chen. VTD File Photo/Alan Panebaker

When Bob Kinzel of VPR asked whether the state’s approach has been a total failure given the scope of the problem, Shumlin said awareness of the obesity issue has “moved leap years” in his view.

“If we can move to a health care system where we reward our providers for outcomes instead of the number of services, and we insist that through education in our schools and communities that we educate Vermonters about what’s healthy and what’s not I would argue we’ve failed pretty miserably … on all of those fronts. We’re making great progress now.”

Education efforts so far, haven’t done enough to shift public perception, according to Zuk, the American Heart Association representative.

Zuk argues raising the price of sugary drinks in combination with a public awareness campaign is the most effective way to curb consumption. This is what ultimately led, she said, to a broad public understanding of the dangers of smoking and a corresponding reduction in use of tobacco products.

She pointed to newfound support from the Vermont Low Income Advocacy Council as a sign that the issue of tax “regressivity” might not be as important to poor Vermonters as concerns about their health are.

Peter Sterling, the executive director of the Vermont Campaign for Health Care Security, says the “regressivity” rallying cry is a red herring. The governor had no problem passing a 67-cent increase in tobacco taxes in 2002, Sterling says, and he recently left open the possibility of taxing heating fuel oil to pay for a new thermal efficiency program.

“I feel that the governor is being a bit hypocritical by emphasizing the regressively of the sugar sweetened beverage tax,” Sterling said. “He doesn’t seem to have any problem raising low-income people’s health care costs. I find it concerning that he is taxing something people need like heating oil, but he’s not willing to tax something they don’t need like a soda.”

What galls Sterling the most, though, is Shumlin’s apparent unwillingness to continue subsidizing health care for low-income Vermonters.

“The governor is willing to raise health care costs for low-income people by thousands of dollars and won’t ask them to pay 12 cents more for a can of Snapple,” Sterling said.

Opposition from grocers, beverage association

Two years ago, Vermont Attorney General Bill Sorrell backed a nearly identical tax proposal, which failed to emerge from House Ways and Means.

John McClaughry, the founder of the Ethan Allen Institute, a conservative think tank based in Kirby, wrote a scathing analysis of Sorrell’s “nanny” tax proposal, which he argued used dubious data attributing $600 million in productivity costs associated with obesity.

The proposal didn’t resurface in the second half of the biennium.

Two lobbying groups — the Vermont Grocers Association and the American Beverage Association — both oppose the bill.

Jim Harrison, head of the grocers, says his members are sensitive to tax increases of any kind because of cross border competition issues with Massachusetts, New York and especially sales-tax free New Hampshire. None of these states have a similar excise tax on sugar-sweetened beverages.

“You could argue this is a tax buried in the price of the product and passed on to consumers, so why care?” Harrison said. “In essence, the retailer is purchasing items for its customers. Any time there is an increase in the cost of a product we sell … it’s a straight pass through.”

Harrison said “every little bit counts” and the small tax on sugary drinks could “push sales across the border.” The state already loses a “phenomenal” amount of business to New Hampshire, he said.

Jane Kolodinsky, a UVM professor and head of the Center for Rural Studies, surveyed consumers this year about whether the excise tax would impel them to shop for sugar sweetened beverages in New Hampshire. Results showed that the excise tax would not have an adverse impact on stores along the border, she said. Consumers, who tend to buy single beverages when they are thirsty, would pay the 12 cent tax or switch to diet drinks, water and 100 percent juices instead.

The state, Harrison says, can’t tax its way out of its obesity problem. “There is no question some people consume too many calories,” Harrison said. “You can’t tax yourself out of obesity, if you don’t want to gain weight, you have to exercise and burn fewer calories. Just trying to tax something isn’t going to be the magic answer.”

If the state starts taxing certain beverages, it’s hard to know where officials will draw the line, Harrison said. “Why not put taxes on basic food commodities in hopes of changing behavior? Once you start taxing everyday food and beverages, where do you draw the line? What’s next salty foods? It’s a slippery slope we should all be cautious of.”

Chris Rice, of the lobbying firm MacLean, Meehan and Rice, says soda consumption has declined as a percentage of beverages consumed by Americans from 51 percent to 33 percent of the overall market. Rice, who represents the American Beverage Association, says there has been a 24 percent decline in calories per serving across all beverages.

The real problem, he says, is consumption of fats and grains, which are the two largest sources of calories consumed by Americans.

Members of the Alliance for a Healthier Vermont include: American Cancer Society, American Heart Association, VT Medical Society, American Academy of Pediatrics VT Chapter, VT State Dental Society, Fletcher Allen Health Care, Northwestern Medical Center, Vermont Low Income Advocacy Council, American Diabetes Association, Vermont Cancer Center, VT Campaign for Health Care Security, AARP-VT, VT Dental Hygienists’ Association, VPIRG, Voices for Vermont’s Children
Health Care Ombudsman’s Office, VT Academy of Family Physicians, VT NEA, VT Nurse Practitioners Association, VT Association of Naturopathic Physicians, VT Dental Assistant Association, VT Association for Health, Physical Education, Recreation, and Dance, VT Citizens Campaign for Health, VT Association of Nurse Anesthetists, Vermont Association of Diabetic Educators, VT Pharmacists Association, Health Connections of the Upper Valley, VT Public Health Association, VT Chiropractic Association, Meeting Waters YMCA
Healthy Communities Coalition of Windham County, VT Association of Orthodontists, VT Chapter of the American Physical Therapy Association, VT State School Nurses Association, VT Association of Periodontology

Correction: The health care exchange goes into effect in 2014. The story originally stated that the exchange started in 2012.

Anne Galloway

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  • From the Alliance For a Healthier Vermont’s FAQ (

    Will milk be taxed?

    No, all milk based products, such as chocolate milk, will be excluded from the tax. This is because milk has important nutrients and there is no scientific evidence that milk with added sugar is a significant contributor to obesity

    Will diet soda be taxed?

    No because it is not sweetened with sugar. There is no scientific evidence that diet soda is a significant contributor to obesity.

    Why not tax candy too?

    There is no scientific evidence that candy is a significant contributor to obesity. In addition, some candy contains important nutrients.

    Seriously? Do every one of these organizations agree with the above answers?

    If so, Vermont has a much more serious problem than SSBs.


    “In nature, sweet foods are packed with calories, so the brain naturally prepares its metabolism to burn those calories.

    However, research has shown that when the sweetness is present, but calories are not, metabolism slows to a crawl. The brain is then tricked into eating more, and because metabolism has slowed, more calories are then stored as fat.”

    • David Dempsey

      A 16 oz coke has about 190 calories in it. A 16 oz lowfat chocolate milk has about 340 calories. But “milk has important nutrients” and would be exempt from the tax. But if you drink a taxable coke you can consume another 150 calories of items containing the unidentified imprtant nutrients in milk. I have several friends who are farmers, and I sometimes say to them, more seriously than jokingly, heaven forbid we piss off the farmers.

  • Lee Stirling

    Drinking sugar-sweetened beverages is a choice people make, nobody’s putting a gun to their head to do it. If politicians are worried about how regressive this tax would be, why not work with Sen. Sanders to stop the gasoline price gouging in NW Vermont by the likes of Skip Vallee and his conspirators? Won’t this alleviate some of the burden from the SSB tax on lower income individuals in this part of the state? I mean, nobody is forcing people to buy sugar-sweetened beverages but if you have to drive you do need to buy gas.

  • David Schoales

    The tax would raise awareness as well as revenues, lowering consumption and improving health.
    Most Vermonters would rather have affordable health care than affordable sweet drinks.
    It’s true the retailers near the border will suffer, but not enough to not do this. That issue is way bigger than just this tax.
    The governor has become a complete politician now- there is no such thing as too much hypocrisy.

    • Craig Powers

      What’s next…taxing how much TV we watch because that makes us sedentary?

    • Lee Stirling

      In other recent stories on, there were reports that about 17,000 individuals who currently obtain subsidized health care through some State programs will face significantly higher out of pocket cost for less coverage through the VT Health Care Exchange beginning in January 2014. The Governor stated that, at present, there isn’t the money right now to make up the $16-18 million gap to offset the increased premiums for these Vermonters. How about using this sugar-sweetened beverage tax to generate that money so nobody has to pay more out of pocket for coverage through the health exchange next year???

  • Steve Raphael

    I have to object to the notion that opposing taxes is “fiscally conservative” when it is in fact the opposite. As an actual fiscal conservative I know that revenues are necessary and to tax things that have significant social costs is a good thing (yes, and gas taxes are a good idea as well). Of course the key is to get them right and specific proposals may have problems.

    I also have to note the unbelievable (well, massive hypocrisy is commonplace these days) hypocrisy about calling the tax regressive when not really doing anything about poverty. A lack of freedom and a lack of the means or ability to use freedom because you cannot afford it are fundamentally the same thing. A tax on soda is not going to change that. If you want to help poorer people, actually help them, do not cover your blatant attempt to help big businesses who make sugar drinks as something noble. A tax on unhealthy foods actually benefits poor people in the long term so any regressivity is fleeting and a hypocritical smokescreen.

  • David Usher

    Where is the data about obesity by age group? We may have more obese children, but we know that the elderly consume more health care services and dollars. Are the elderly also more obese than past generations which contributes to the higher healthcare costs? What is the principal cause of their obesity? Sugary drinks or calories from solid food? Should we raise taxes for those calories, too?

    Then there’s the real concern to assure that any dollars raised by the proposed sugar tax are used for reducing their consumption or for healthcare. The record is not good on using tobacco dollars only to foster smoking cessation.

    The real problem we face as a society is a growing permissive culture where personal and parental accountability and responsibility shrink as our girth expands, a symptom of the permissiveness.

  • Cheryl Pariseau

    “…according to the alliance. In 2009, Medicaid paid for surgical tooth extractions for 421 Vermont children under the age of 5 at a cost of $2.2 million.”

    That is $5,225.65 per tooth extracted… seems like a huge sum to have a tooth extracted. Many who I’ve spoken with who have had a tooth extracted cite a few hundred dollars as the cost. We’re always told that Medicaid has the lowest reimbursement rates that is part of the reason private insurance is so low. Why is it so much more expensive for Medicaid recipients? or is this a bloated figure? Perhaps a better way then taxing sugary drinks is to remove this as an eligible item under the 3Square (Food Stamp) program.

    “The tax would raise about $27 million in Vermont based on figures from the Yale Rudd Center for Food and Policy. The money could be used to pay for an anti-obesity campaign, much like the anti-tobacco public awareness advertising that health advocates have successfully used to deter Americans from smoking, according to Tina Zuk, of the American Heart Association.”

    Although some of the tobacco settlement money and taxes are used for anti-tobacco programs much of this money is siphoned away to support unrelated projects ( , Some have even likened the “fat taxes” to the anti-tobacco taxes. This simply seems like a money grab, which tobacco taxes have turned into. Just another reason to take more Vermonters money to support feel good pet projects that the state really cannot afford.

  • peter sterling

    I am the volunteer coordinator of the Alliance for a Healthier Vermont, the coalition supporting the Sugar Sweetened Beverage Tax.

    In response to Cheryl’s post about the high cost of tooth extractions, based on my conversations with oral health providers, many of those children had multiple extractions so the average cost per tooth is much lower than the figure you cited. I don’t know the exact figure however.

    I would also like to add that for everyone involved in supporting the tax, the income generated is a secondary benefit. The primary reason to enact a tax on sugary beverages is for health reasons– to decrease consumption to reduce VT’s obesity rates.

    The fact that money is raised is entirely secondary. Therefore, whether or not all or part of the tax goes to health related programs is of lesser concern to those of us working to fight obesity.

    • Lance Hagen

      “The fact that money is raised is entirely secondary. Therefore, whether or not all or part of the tax goes to health related programs is of lesser concern to those of us working to fight obesity.”

      That is what the British said when they passed the Sugar Act on the Colonial America in 1764.

      I think it caused a revolution.

  • David Rogers

    We tax cigarettes so we should tax anything with a high calories from carbohydrates content including milk,fast food, takeout ,etc

    Call it the Health Care User fee

  • rosemarie jackowski

    This tax would be regressive. It would be excessive interference of government in the private lives of citizens. It would be a very sticky situation.

    Sometimes sugar sweetened drinks are medically necessary – ginger ale for example during preps for colonoscapy. An ounce of Pepsi with Anacin is sometimes recommentded for first thing in the morning, especially for those who suffer from Cluster Headaches. Some people benefit from caffeine.

    The VT tax code is already unnecessarily complicated. Tax it if it is hot. No tax if it is cold. Artificially sweetened drinks are probably even more harmful than sugar sweetened ones.

    If any tax on food is necessary, let’s tax GMO foods – and foods that have artificial flavors.

  • Tom Pelham

    While we’re at it, might we consider a balanced approach that includes eliminating contributions to obesity funded by state government as profiled in this Burlington Free Press article by Molly Walsh awhile back.

    Taxing a consumers choice to buy a sugar sweetened soda on the one hand while on the other hand allowing the use of taxpayer funds to subsidize and thus encourage the consumption of these very same items, especially when those subidized are among Vermont’s most vulnerable, doesn’t make for a compelling pitch for higher taxes.

  • David Dempsey

    16 oz coke-about around 200 calories. 16 oz low fat chocolate milk-about 340 calories. As I often say to my friends who farm, heaven forbid we piss off the farmers.


    We need a Junk food tax. It will help solve the fiscal crisis/healthcare crisis. We need to raise taxes to deal with the budget/human needs crisis!!1 NO MORE CUTS IN AHS/DAIL!!!!!!!!!!!!!!!!!! Stop managing to the $$$$

  • James Maroney

    Putting momentarily aside the contradiction between the assertion that soda pop has reduced consumption of “healthy beverages like milk” and T. Colin Campbell’s extremely compelling argument in “The China Study” that milk is in fact more dangerous to our collective health than soda pop, I am intrigued by the suggestion that America’s obesity epidemic can be treated by taxing soda, which is sweetened with HFCS. America’s obesity problem is not attributable to soda pop but to the fact that America’s farmers are encouraged to grow corn, as they are encouraged to produce milk, in surplus, in order that it be cheap. The root cause of the obesity problem, which is our subject, is corn, which because it is grown in surplus to be cheap, is also consumed in surplus. That surplus allows some large portion of the harvest to be diverted away from human “food” to animal feed and other uses, like plastic, ethanol and HFCS, which finds its way into a host of manufactured “food” among them soda pop.

    In the years prior to WWII the average American worker spent about 32% of his/her annual paycheck for food. Today that expenditure has dwindled to about 8%, a four-fold saving. We have all thought this was a wonderful thing. And cheap food would be a good thing in and of itself until we realize that farmers have achieved “efficiencies” by consolidating into one barn as many cows as access to land and capital will permit, by feeding them not grass but corn (made from cheap petroleum) for maximum production and by externalizing the true costs of soil fertility (urea is soluble) and the disposal of manure, which if it is not returned to the same fields from which the cows feed came is spread in proximity to the barn at rates out of all proportion to the needs of the crops and is therefore a virulent, nitrite-laden non-point source pollutant, into the environment. Chesapeake Bay, the Great Lakes and Lake Champlain are all polluted to the brink of ecological collapse by farm wastes yet the government will not regulate let alone ban the use of fertilizer because doing so would be perceived as a burden to farmers. The real reason however is that it would raise the price of food.

    My point in a nutshell is that if America wants to lose weight, the government must encourage the production of healthy food, it must pay farmers directly what it costs to raise our food, plus a profit, so they will not use synthetic fertilizers to make surpluses that pollute the environment. Lowering agriculture’s use of petroleum (about 18% of American’s total annual energy consumption) also slows resource depletion and global warming. To achieve all this at one fell swoop, the tax you propose to be levied against soda pop should instead by levied against synthetic ammonium nitrate fertilizers. This would cause yields to drop and the price of food to rise. That is the point: if food were more expensive, we would eat less of it and lose weight.

    I know what you are thinking: raising food prices would also mean hardship, even starvation, for the lower classes. But these are better addressed with food stamps and other federal nutrition programs already in place. Feeding the poor can no longer be a justification for polluting the environment. The obesity epidemic, a polluted environment, rural economic recovery and global warming are all stanched by raising food prices.

    • Thanks James. This makes a lot of sense.

      The drop in milk sales could be in part due to people becoming lactose intolerant. But, is it the lactose, or is it the all the industrial chemicals we get in our milk? Similarly, gluten itself may not be as much of a problem as the what is sprayed on the wheat and the way the wheat is refined.

      Clearly, this claim that the obesity problem is caused by sugar sweetened beverages is 100% incorrect. Sugar sweetened soda has been nearly non-existent for decades (although it has made a comeback as of late). If the AHV thinks the obesity problem over the past couple decades is caused by soda consumption, then why not focus on HFCS and Aspartame, the two ingredients that make soda so addictive and have the most dramatic effects on our metabolism? To suggest we tax green tea with a little organic cane sugar and not tax diet orange soda is really absurd.

      My advice for the proponents of the tax:

      1. Get the cane sugar cubes off your website. The drinks you show do not contain any sugar. They contain HFCS.

      2. Stop losing sleep over sugar. There are a hundred other food additives allowed by the FDA that are making us sick much faster than table sugar.

      3. Be our doctors, not our nannys. Focus on EDUCATION about food colorings, canola oil, MSG, artificial sweeteners and other obvious junk foods. Pontificating as though that diet coke in your hand somehow makes you better than the folks who drink regular is not helping.


    We should impose a junk food tax. It will solve our budget issues and pay for universal healthcare !!!
    We must raise taxes to offset cuts in AHS programs

  • Frank Wadelton

    It seems like the system put in place to support the disadvantaged or disabled has been distorted to a point where it only serves as a sales tool for nutrition-less food products like HFCS. Much of entire generation of kids is living nearly 100% on chemical compounds while our local producers grow weaker with each passing year.

    Rather than continually adding layers of bureaucracy and the value shrinkage that goes with it, lets figure out a way to fill the need on a local level and enrich our local economy at the same time.

    The mainline connecting industry to tax dollars must be broken. A beverage tax would be directly returned to the same people as “corn money” and split with the bureaucrats who make it happen.

    It seems to always go back to cheap petro, as already mentioned.

    Just imagine if the corn farmers in your town produced all the HFCS consumed in your town.

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