Sales tax for soft drinks, other laws go into effect July 1

That Coke will cost a little more beginning Wednesday.

A six percent sales tax on sugary drinks goes into effect July 1.

The Vermont Legislature and Gov. Peter Shumlin approved the extension of the sales tax to soda and other sweet drinks as part of a tax package passed last session.

Tina Zuk, director of government relations for the American Heart Association, was an advocate for an excise tax of 2 cents per ounce on all sugar-added drinks, which was proposed as H.24 in January. That bill failed and the sales tax was added in the final days of the session.

An excise tax would have changed behavior, Zuk said, because consumers would have seen a higher shelf price for sugary drinks. Excise taxes are charged to the distributors of certain products and are rolled into the price charged to consumers, she said.

The excise tax funds — about $30 million — would have been used to combat obesity, subsidize healthier food for low-income Vermonters and improved access to places for recreation in communities.

“We’re really concerned about the obesity crisis in both the number of adults and kids, and we know that sugary drinks are a huge contributor to obesity so we wanted to discourage consumption,” she said.

Vermont has the eighth-lowest adult obesity rate in the country, according to the 2014 State of Obesity report. However, almost 62 percent of Vermont adults are overweight and/or obese and about 11.3 percent of children in Vermont ages 10 through 17 are obese, according to a 2011 survey in the report.

Jim Harrison, president of the Vermont Retailers and Grocers Association, has a different problem with the new tax.

“The Legislature made our job a little more difficult with the definition that was selected for ‘soft drinks,’” Harrison said. “Retailers are busy trying to figure out what items in their store are taxable and which ones are not.”

Exemptions to the soft drink law include items purchased with food stamps, those that contain milk, soy, rice or other milk substitutes and those that contain greater than 50 percent vegetable or fruit juice by volume, according to a Vermont Department of Taxes fact sheet. Soft drinks are considered to be nonalcoholic beverages that contain natural or artificial sweeteners.

“We certainly didn’t support the new sales tax and getting it to groceries, but the point is now that it’s passed — we need to figure out a way to get it implemented,” Harrison said. “Hopefully, our customers will be patient with their retailers as they all try to understand and better learn what items are taxable and what items are not taxable.”

Also starting Wednesday, all food and beverages sold in vending machines are subject to the 9 percent Vermont Meals and Rooms tax.

Other laws that take effect July 1

Lobbyist disclosures: Lobbyists, lobbyist employers and lobbying firms in the Statehouse will be required to disclose expenses more often during the legislative session. As of today, all three groups will be required to file their expenditures monthly while lawmakers are in Montpelier, increasing the annual reporting dates to seven times a year. Lobbyists will also be required to report mass media purchases of $1,000 or more within 48 hours. Advertisements paid for by lobbyists that are designed to influence legislative action must also state within the ad that it was paid for by the lobbyist or lobbying firm.

Hand-held cellphones: Effective today, it is illegal to use a hand-held cellphone while stopped in traffic, such as a stoplight. Lawmakers clarified last year’s ban on the use of hand-held cellphones while driving to include vehicles stopped in traffic. Operators may use their hand-held devices while safely parked in a legal space. The use of hands-free electronic devices, such as Bluetooth, is allowed while driving.

Sex offenders: The responsibility for reporting information on convicted sex offenders to the sex offender registry now falls to the court system instead of the Public Safety Department.

Solid waste law: The state will require recycling containers to be located in all public buildings and property, and solid waste haulers must offer curbside service for residential recycling. This law also implements a Pay As You Throw program where residents will be charged based on the volume and weight of the material collected from them rather than one standard fee for the service of collecting trash.

Latin motto: The new Latin motto of the state of Vermont will be “Stella quarta decima fulgeat,” which means “May the fourteenth star shine bright,” effective July 1. The motto is a reference to Vermont being the fourteenth state of the union and used to appear on state coins.

Indefinite ban on settlement loans: There will be a one-year ban on consumer litigation funding or settlement loans while the House Committee on Commerce revisits the issue during the next legislative session. The new law will also require Susan Donegan, commissioner of the Department of Financial Regulation, to submit a report on the litigation funding industry by Dec. 1.

Provision to animal cruelty law: Persons who are guilty of animal cruelty now include those who own and/or use equipment and paraphernalia to train an animal’s fighting capability under the new law which will take effect July 1. Those who are found with such equipment will be subject to asset forfeiture.

Water quality bill: Effective June 17, a 0.2 percent surcharge on property transfer tax will be implemented to raise money toward cleaning up the state’s waters and will last until 2018. The first $200,000 of property is exempt from the surcharge if the purchaser gets certain government-funded mortgages. This surcharge will be added to the current property transfer tax rate of 1.25 percent. It is expected to raise $5.3 million in fiscal year 2016.

VTDigger’s Tom Brown contributed to this report.

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  • The sales tax was not extended to candy, as reported in the article. Thank you in advance for correcting this.

    • Yes, we corrected almost as soon as this went up. Thanks for being quick on the draw.

  • Aula DeWitt

    According to the information on what one may buy with food stamps/SNAP/3SquaresVT on may buy ‘soft drinks’ and also energy drinks. [SEE: http://www.fns.usda.gov/snap/eligible-food-items%5D

    My question then is, based on the article above, are soft drinks and qualifying energy drinks therefore exempt from the tax for everyone, or only if they are being purchased with Food stamps?

  • Randy Jorgensen

    So. They exempt the sales tax on soda when it’s purchased with food stamps. Aren’t these the folks that we don’t want buying this stuff because it’s

    A) Supposedly bad for you, or at least has no nutritional value.
    B) Obesity rates are highest among the poor. (conflicting data)

    So this wasn’t about a healthier Vermont, it was about revenue. From my understanding we already have a total budget that is on par with NH, yet NH has twice the population.

  • Doug Hoffer

    “From my understanding we already have a total budget that is on par with NH, yet NH has twice the population.”

    Are you sure that’s apples to apples? Don’t forget the differences in the local contribution.

    Here are the figures from the Census Bureau for State & Local, State, and Local for 2012.

    NH 11,397,102 7,423,747 5,262,447
    VT 6,932,830 5,959,250 2,611,202

    Total expenditures were considerably higher in NH. Local expenditures were 46% of the total in NH and 38% in VT.

    And as for education (from another of your comments elsewhere), Census reports that total spending for elementary and secondary education was:

    NH $2.759 billion
    VT $1.477 billion

    The way we finance education makes comparisons challenging.

    • Randy Jorgensen

      Doug I used the information from the NH website and the VT website. This includes Federal funds. Federal funds make up a larger portion of Vermont’s budget then does NH’s, according to the state website.

      NH total budget.
      $5,406,830,627
      http://www.nh.gov/transparentnh/where-the-money-comes-from/

      VT total budget
      ~$5,600,000
      http://spotlight.vermont.gov/budget

      For the education data I used this report from National Association of State Budget Officers
      (NASBO) Page 12.

      http://www.nasbo.org/sites/default/files/State%20Expenditure%20Report%20%28Fiscal%202012-2014%29S.pdf

      • Randy Jorgensen
        • Doug Hoffer

          It still doesn’t include local expenditures for education. Vermont’s figure includes all education revenue & expenditures. NH raises a lot of k-12 money at the local level. You can’t compare the states without correcting for that.

          • Neil Johnson

            How much more do you think? Nh raises 2x what the budget numbers are? It would be nice to get some actual comparisons. Per student was certainly spending some money.

          • Randy Jorgensen

            According to the NEA for 2013-2014 VT spent 25,479 per student. NH spent 17,519.
            VT ranked number 1 in spending per student NH ranked #10. Not sure if that was what you are looking for but that should give you a comparison.

      • Doug Hoffer

        The figures are not comparable because Vermont’s includes all education funding and NH does not.

    • Frank Beardsley

      Thank you for reminding me why I chose not to become a government bean-counter.

      • David Dempsey

        I agree completely Frank. The bean counters comments here only serve to confuse me and don’t address the question you asked about the sales tax.

  • Jim Barrett

    This was strictly a revenue booster for the thirsty state and has nothing to do with health. Excuses every year from the legislature over the need for more taxes and punishment for the working person to get them to march to their tune. Shumlin always finds a way to agree in the end to the constant tax increases while trying to make it look like he is the good guy. Also, weighing garbage should be interesting and very expensive for everyone of us. More poverty equals a loving Vermont.

  • Rachael Bliss

    This tax does not apply if you are using 3 Square? (food stamps) Where is the logic in that??? I was against this tax from the beginning but this is just one more asinine reason why it should never have become law!

    • fred moss

      They are a protected class; dependents.

      Future voters for the dems. pretty simple

  • Kristin Sohlstrom

    When the legislators who thought this tax was such a good idea sit at a bar to come up with other “great” ideas, they better have extra change in their pockets for their cocktails.

  • John McClaughry

    Let’s review. AG Sorrell vows a battle against obesity. Sugar causes obesity! So let’s tax sugar. Uhhhhh, but not maple syrup. Or chocolate milk. Or Ben and Jerry’s ice cream. Or wedding cakes for both kinds of couples. Or Girl Scout cookies. But just taxing sugary beverages doesn’t raise enough money. Let’s tax sugar sodas and also diet sodas, which are used to fend off obesity! (Never mind that.) Hooray! More revenue!

    • Robert Joseph

      Exactly.

      Amazed some people (and legislators) are STILL defending this tax as a tactic to combat obesity.

  • Matt Fisken

    It seems the link may have broken when the article was edited to exclude candy.

    Here’s the correct link (why does our government still put spaces in names of online documents?):

    http://legislature.vermont.gov/assets/Documents/2016/Docs/ACTS/ACT057/ACT057%20Act%20Summary.pdf

    What this law got right is that artificially-sweetened diet sodas are not healthy alternatives to SSBs, and thus, should be taxed.

    The food stamp exemption is strange and there may be some beverages that will be taxed that are very healthy, such as kombucha. Is it already excise taxed, like alcohol, because it contains about .5% abv?

    The idea that consumers see and respond to an excise tax but don’t see a sales tax seems like a pretty silly thing to believe.

    Common sense tells us that most consumers buy what they are thirsty for, not what is cheaper. For the average shopper who is picking up a few cases of soda along with their groceries, they know they are getting a good price per oz. and probably won’t be dissuaded if that price is a little higher on the shelf.

    On the other hand, if a shopper cares about what they are spending, they will presumably check their receipt to make sure everything rang up correctly, at which point they would probably notice the added tax as a separate line item. Or that 12-year-old who goes into a convenience store with a dollar thinking he can buy a 99¢ soda will be surprised that he’ll have to take a few pennies out of the penny cup to complete the transaction.

    How many beer drinkers know/consider how much a six-pack or case would have cost without an excise tax and do you think any are changing their behavior because of it?

    The end goal of the proponents of the 2¢/oz tax on SSBs was to make diet soda cheaper, thinking that all of Vermont’s low-income soda drinkers would switch to diet soda. This was not going to happen given that the Beverage Association was going to spread the SSB excise tax across all beverages.

    The result is roughly the same, except Vermont wasn’t hoodwinked into creating statute that intended to promote artificial sweeteners, even if it never would have.

    If people want to make unhealthy choices, or are addicted to sugar or aspartame, they will continue that lifestyle regardless of a tax. Proponents of the excise tax point to cigarettes as an example of how taxing a product lowers its use/consumption. This underestimates the value of existing knowledge that these products are harmful and that Big Tobacco’s/Soda’s clientele is, an dwindling, diseased segment of the population.

    I continue to believe that it is the job of health care providers to discourage soda drinking, just as they should discourage heavy alcohol consumption and smoking. Relying on government to coerce people into making healthy choices is a poor way to approach public health. It is entirely irresponsible for doctors to be prescribing certain medications when ailments can often be traced to certain consumer goods, like soda and additive-laden processed foods. But doctors don’t make money or win the respect of their patients by telling them to simply kick bad habits, so off to the pharmacy they are sent, where soda is stacked by the pallet at the front door.

    Boy, all this commenting is making me thirsty.

  • John Markoski

    Let’s be real. This isn’t about anyone’s concern for anyone else’s health. If it were, it would also apply to “diet” drinks. In fact, if this were about health, it should ONLY apply to diet drinks, as aspartame is one of the worst things anyone should be putting into their body. If this were about health, food stamp users wouldn’t be exempted. Plain and simple, this is yet another money grab. And I say this as a non-soda drinker.

    But, as an alternative, I propose a $.02 per ounce “surcharge” on coffee, which I also don’t drink. It’ll be fun watching all the goody-two-shoes social engineers out there have a fit when their 60 ounces of coffee a day costs them $1.20 more.

  • james robar

    so i need to know if price chopper orange flavored water which has absolutely no sugar in it can be taxed? just got into a heated argument with a store employee there?? please clarify

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