Editor’s note: This commentary is by Shayne Spence, who is the outreach and development coordinator for the Ethan Allen Institute. He lives in St. Albans.
[W]ell, 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 ounce bottle of Coca-Cola would have its price increased by 40 cents, a 22 percent 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 percent 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 percent 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.
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.
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 (VTDigger March 12, 2015). 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.
