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Congress Considers Beverage 'Sugar Tax' to Pay for Health Care

By Shailagh Murray
Here's one idea Congress is considering to pay for health-care reform: a tax on sugary beverages, like soda.

And why not? A federal excise tax in the range of 3 cents per 12 ounces on beverages sweetened with sugar, high-fructose corn syrup or other sweeteners might discourage consumption of products with little nutritional value while curtailing diabetes and obesity -- two serious public-health problems. The tax would yield $51 billion in federal revenue over 10 years, according to Congress's Joint Committee on Taxation, helping to offset the cost of legislation likely to cost $1 trillion.

Of the nearly 50 million Americans who are uninsured, many are middle and low-income individuals. And as it turns out, these beneficiaries of health-care reform are the same people who would pay a disproportionate share of a sugar tax.

The threat of joining cigarettes and alcohol in the "sin tax" family has sent the beverage and grocery industry reeling. The American Beverage Association, the Grocery Manufacturers Association, the National Restaurant Association and others have launched the group "Americans Against Food Taxes" to lobby against the levy. A newspaper ad campaign will begin Sunday in The Washington Post, the group announced.

Thirteen Democrats from vulnerable districts have taken up the cause, signing a letter to Ways and Means Chairman Charles Rangel (D-N.Y.) and ranking GOP member Dave Camp (R-Mich.) that portrays the tax as regressive and potentially harmful to healthy eating.

Seventy percent of a sugar tax would be paid by individuals earning under $92,000 per year, the group notes, citing a study by the Congressional Research Service. And because the tax would increase grocery bills, the letter continues, "Consumers are just as likely to reduce expenditures on fruits and vegetables as they are to reduce expenditures on items subject to a tax."

Proponents of the tax counter that consumption of sugary beverages is highest among people who are most prone to obesity and Type 2 diabetes -- diseases that are driving up health care costs at crippling rates. An April 30 article in the New England Journal of Medicine by Kelly Brownell, director of the Rudd Center for Food Policy at Yale University, and former New York City health commissioner Thomas Frieden, now director of the Centers for Disease Control and Prevention, portrays soda and other sugary drinks as potentially serious health threats.

The authors found that in the past decade, per capita intake of calories from sugar-sweetened beverages has increased by nearly 30 percent, and that "such drinks now account for 10 to 15 percent of the calories consumed by children and adolescents." Studies have shown that with every can of soda a child consumes per day, the risk of obesity grows by as much as 60 percent, they noted. And they cited beverage industry research showing that as prices rise, consumption of carbonated soft drinks plummets.

Obesity alone costs the health-care system an estimated $80 billion per year, the authors found, and about half that cost is paid by the government through Medicare and Medicaid. "The poor are disproportionately affected by diet-related diseases and would derive the greatest benefit from reduced consumption," Brownell and Frieden wrote.

The consumption threat may explain the beverage industry's lobbying campaign, but for lawmakers, the main drawback is the cost to low-income individuals. A sugar tax would violate President Obama's pledge not to raise taxes on annual household incomes below $250,000 and could prove especially unpopular in the midst of a recession. A list of proposed tax increases released today by the House Ways and Means Committee did not include a sugar tax, and the idea is no more popular in the Senate -- although that could change, depending on how difficult it proves to find other tax increases. "Lots of senators don't like it, because of the people it affects," said Sen. Kent Conrad (D-N.D.), one of the negotiators of the Senate health-care legislation.

By Web Politics Editor  |  July 10, 2009; 5:26 PM ET
Categories:  Health Reform  
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Comments

And why? Why just sodas? The calorie tax, while an amazingly stupid idea, makes more sense than a simple soda tax. Just because someone gets it in their head that they don't like soda and "empty calories," that is not even in the same league as smoking or even drinking alcohol. Come on...

Posted by: byte1 | July 10, 2009 7:19 PM | Report abuse

these tax happy low lifes will be remembered when election time rolls around. the money these thieves have thrown away in the last five months would have made a difference to millions of american familys,but it is more important to them to take care of unions and acorn,and pork. every one of these jerks will wish they had listened to the people.

Posted by: silusdogood | July 10, 2009 9:11 PM | Report abuse

When I see what is taking place in Congress, especially since 01/20, I think
Ben Franklin said it best-

"ACTIVITIES ENGAGED IN BY A CITIZEN TO PREVENT THE GOVERNMENT FROM CONFISCATING THE FRUITS OF HIS LABOR ARE THE NOBLEST ENDEAVORS OF MAN."

This sugar tax is nothing more than a way for Obama and his Liberal cohorts in crime to steal money from everyday citizens.

Whether people agree with smoking or not, the tobacco tax Congress recently passed put 90% of the tax burden on citizens earning less than $ 60,000/yr. When I went to school, $60K was less than $250K or has the "new math" changed this?

Posted by: Chuckmba | July 11, 2009 11:41 AM | Report abuse

I believe it should not be a tax only on sugary beverages, but any product that is not 100% fruit/vegetable/milk that contains more than 10 grams of sugar per serving. I also believe we should assess a tax on alcohol and tobacco. These are all consumables that contribute to the most costly medical conditions. Those who would be consuming these products would be paying more into the system to pay for the conditions arising or being exacerbated by the overuse of such products. Obviously it should be combined with education about healthy alternatives. As far as the criticism that this more likely affects the budgets of low income Americans, I say that water is a beverage alternative that is free.

Posted by: lcr_pa | July 11, 2009 11:47 AM | Report abuse

It's sugar or salt folks. If you buy just about any processed "food" you will get a heavy dose of one or the other.
We should do everything possible to pull the plug on the sugar industry completely. IF this can't be done then we should at least stop giving the sugar industry billions of dollars in subsidies. IF this can't be done then, yes, we need a sugar tax so that the people that use the junk are at least reimbursing the goverment for the sugar subsidies.

Posted by: JoeNTx | July 12, 2009 10:03 PM | Report abuse

If I have learned anything in my 25 years as a registered dietitian counseling people about healthy eating and serving as a consultant to food and beverage companies to help deliver sound messages about good nutrition, it is that obesity is a profoundly complex problem for which there are no simple solutions, so there’s little reason to believe that taxing or even prohibiting any food or beverage is going to change the course of this very serious problem. It is also important to note that obesity rates have risen around the world where diets and lifestyle differ dramatically from those in the US, providing further evidence that it’s not about soda or how it’s sweetened. In fact, obesity rates have continued to climb here while consumption of sugar-sweetened beverages has fallen. But for argument‘s sake, if the tax on soda were imposed and it did discourage people from buying it, where would the money come from to pay for health care reform? Bottom line: Taxing soda will not solve the obesity problem, and it certainly won’t generate the needed health care funds to properly deal with it.

Posted by: rlflipse | July 13, 2009 7:42 PM | Report abuse

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