[T]he House Ways and Means Committee approved a tax package Thursday that will raise $22 million for health care spending.
The $22 million package includes a half-cent per ounce excise tax on sweetened beverages coupled with a 25 cent increase in tobacco taxes and the removal of a sales tax exemption for dietary supplements. Previous versions of the package taxed only beverages sweetened with added sugar, but the Ways and Means Committee expanded it to include artificially sweetened diet drinks. The bill exempts milk products, 100 percent juices and beverages sweetened with maple syrup.
After more than a week of gridlock in the committee, the package started to gain momentum late Wednesday during a recess from floor debate on a water quality bill. The committee voted 6-4 in favor of the taxes, setting up Thursday’s vote on the underlying bill.
Rep. Carolyn Branagan, R-Georgia, was the deciding vote Wednesday. Chairwoman Rep. Janet Ancel, D-Calais, had delayed a vote on the package several times because her committee was deadlocked with Rep. Joey Donovan, D-Burlington, who supports the package, absent until Thursday.
“Those six who supported it (Wednesday) let it out the door,” said Rep. Patti Komline, R-Dorset, who along with a group of fiscal conservatives on the committee, voted against the taxes.
Thursday’s vote was 6-5 with Branagan ultimately voting against the overall bill, H.481. Branagan said she didn’t see her vote Wednesday as pivotal, because with Donovan’s return, the bill was likely to move anyway.
“The only reason I voted ‘yes’ last night on this draft request, which was not anything permanent, was because it was a lower tax,” she said.
H.481 originally had a 2 cent per ounce excise tax.
The other “no” votes Wednesday and Thursday were Rep. Adam Greshin, I-Warren, Rep. Jim Condon, D-Colchester, and Bill Canfield, R-Fair Haven. Voting in favor with Ancel and Donovan were Reps. George Till, D-Jericho, Jim Masland, D-Thetford Center, Alison Clarkson, D-Woodstock, and Sam Young, D-Glover.
As an alternative, Condon offered a package that made small increases to a variety of items covered by the state sales tax.
Condon questioned whether the excise tax would actually reduce obesity, as proponents argue it will. The excise tax is levied on the distributors, but Condon predicted that retailers would spread the increased cost of sweetened beverages across the products they offer.
Greshin objected to the cost of implementing the sugar sweetened beverage tax. The state must invest $810,000 to collect the tax.
“Despite the ample opportunity within our tax code to raise revenue, we’re going to invest three-quarters of a million dollars to create a brand new tax,” said Greshin.
Tina Zuk of the Vermont Heart Association, which is part of a coalition advocating for the beverage tax, said that same argument was raised when tobacco taxes were implemented.
Zuk’s coalition, Alliance for a Healthier Vermont, is pleased that the beverage tax is still in play but she said the scientific literature suggests that a half-cent per ounce tax might not be enough to influence consumer choices. The minimum threshold is a penny per ounce, she said.
“All the science out there says that, similar to tobacco, a 10 percent increase in price is when you see it really affects consumers’ choices,” she said.
But the small tax indicates lawmakers recognize the impact sugary drinks have on public health, she said, and “while it’s not exactly what we want, it gives us a way of getting there.”
Jim Harrison of the Vermont Retail and Grocers Association said the beverage tax puts Vermont on the wrong path.
“It’s going to make products more expensive. It’s going to be ripe for increasing, because it’s hidden from consumers, and it’s going to do nothing but send business across the border and disproportionately hurt small stores,” he said.
The sweetened beverage excise tax will raise $17.6 million in a full year, and the combination of changes to the sales tax will generate an additional $4.5 million.
The health care bill now goes to the House Appropriations Committee.
Ways and Means chose to strike the health care spending from H.481 to allow the Appropriations Committee to insert a spending package endorsed by the House Health Care Committee earlier in the week.
The Health Care Committee raised Medicaid rates for doctors and hospitals and payments for the Blueprint for Health primary care program. It also increases subsidies for out of pocket costs in exchange health plans.
The $22 million tax package to support health care spending brings the total amount of tax increases under consideration by the House this session to roughly $65 million.
