Spread of Soda Taxes Fizzles

By: - February 14, 2012 12:00 am

In 2010, with concern over obesity and especially childhood obesity on the rise, several states, including New York, California, Washington, Kansas and Rhode Island, engaged in spirited debates about new taxes on soft drinks. Just as every state has a cigarette tax and every state taxes alcohol, soda taxes seemed as though they might be the new sin tax of choice. So far, though, that hasn’t happened.

Momentum for soda taxes has fizzled out. Bills to create them were introduced in about 15 states last year, but, unlike in 2010, few of them gained much traction or much attention. Hawaii Governor Neil Abercrombie made a prominent push for the idea, but it died quickly in a legislative committee. This year, rather than reintroduce the tax, Abercrombie wants a task force to study ways to reduce consumption of sugar-sweetened beverages.

As of the start of 2011,  almost half of the states did tax soft drinks at a higher rate than other food products, according to the Bridging the Gap project at the  University of Illinois-Chicago . Most of those states, though, merely  apply regular sales taxes to soda, while exempting food. Only a few states impose special excise taxes on soda the way they do on cigarettes. No state taxes soda at the levels public health researchers argue would be necessary to substantially reduce their consumption.

Even sales taxes on soda are now difficult to enact. When Massachusetts Governor Deval Patrick introduced his new budget in January, he proposed one. His case was that the tax would promote public health, while yielding revenue to relieve strains on Massachusetts’ budget. But it’s a case that Patrick, a former Coca-Cola executive, has now made for four years without success. “The chances of moving it through the legislature have been very slim,” says Patrick Tigue of Community Catalyst, a nonprofit that advocates for soda taxes, “and this year looks like it promises to be no different.”

One reason the momentum has stalled is that all tax increases have been off the table in many states lately. Equally important, the soft drink industry has pushed back aggressively, mobilizing opposition from convenience stores and bottlers, among others. “The excise tax is discriminatory, it’s regressive, it singles out one industry,” says Chris Gindlesperger, director of communications at the American Beverage Association. “It’s government digging into the grocery cart of people.” The industry has scored some big victories. In 2010, with 60 percent of the vote, Washington State voters repealed a law that raised soda taxes. 

What’s less clear is whether the idea has fallen out of favor in a lasting way or whether these are just temporary setbacks. Tigue notes that it took many years for cigarette taxes to gain broad acceptance and that there’s a strong commitment to soda taxes in public health circles. Even Gindlesperger  expects the issue to come up in more places in 2013, once lawmakers make it through election season.

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Josh Goodman

Josh Goodman helps lead research on fiscal management and place-based economic development programs as part of Pew’s state fiscal health project. Goodman has served as a primary author for Pew studies that examine how states should evaluate tax incentives and maintain budget discipline when implementing those incentives.