As many states struggle with unbalanced budgets, state lawmakers throughout the country are looking for ways to raise revenue rather than reduce wasteful government spending. One idea that several states are considering is imposing hefty taxes on soda, teas, sports drinks and other beverages. In the past year alone, 17 states and several cities have proposed taxing soft drinks.
Even though Congress failed to generate the support for a national drink tax to help finance government controlled healthcare, states like Rhode Island are moving forward with similar proposals. Legislators in the Ocean State are currently debating whether or not to levy a five cent tax on soft drinks, 10 cents on each product larger than 20 ounces. Other states and cities want to go further. The mayor of Philadelphia has suggested taxing at a rate of two penny’s per ounce, resulting in consumers getting pinched for an extra $2.88 when they buy a 12-pack of Coca-Cola.
In the past year alone, 17 states and several cities have proposed taxing soft drinks.
Proponents of the tax claim charging more for sugary drinks will achieve lower obesity and diabetes rates. And, politicians are using that argument to cloak their real motive, which is to raise more money to spend on big government programs. Several independent studies have concluded that a beverage tax will do little to nothing to change consumer behavior to the point it will begin reducing obesity rates. However, what taxing soda will do is increase grocery bills, further weakening the economy and exacerbating unemployment.
Soda manufactures believe it will have a negative impact on their sales, which could force manufacturing and distributing plants to shed jobs. Grocery stores and other retailers predict their businesses will suffer as well. They believe thrifty shoppers, especially those living close to the borders, will take their business into states that do not impose similar taxes. That also means less sales tax revenue for the states. Moreover, those who are likely to change their purchasing habits are those who make less money, meaning a tax on soda will hit the low and middle class the hardest.
A broad coalition representing the food, beverage, hospitality, grocery and convenience store industries are fighting against these proposals as they pop up in each state. They have a clear and commonsense message for lawmakers: now is not time to be raising the price of groceries and it is not the time to pass policies that hurt small businesses.