Capitol Briefing Blog – Washington Post
July 10, 2009
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.