by Nat Rudarakanchana February 20, 2013 vtdigger.org The House Health Care Committee voted 7-2-2 today to include a controversial penny per ounce excise tax on sugar-sweetened drinks in an overall health care package, which will be voted on Friday.
They also voted to sunset an assessment on employers that is now used to fund Catamount, a state health program subsidizing low-income workers, though they didn’ t discuss a date on which the fee might expire.
The decision comes after days of testimony from backers and critics of the sugar-sweetened beverage tax. Supporters say the tax will raise revenue to fight obesity and fund health care subsidies for the poor. Critics say the tax is regressive and ineffectual, since it will hit the pocketbooks of the poor hardest, send Vermonters to shop in New Hampshire, and cause retailers to spread the costs of the tax onto other products.
House Health Care Committee chair Michael Fisher, D-Lincoln, prefers the beverage tax over the employer assessment.
‘ I think there’ s some real public health issues to be addressed by this concept,’ he said in an interview. ‘ For people who are price sensitive, I’ ve heard enough evidence to believe that we can have some impact on buying patterns.’
Lawmakers who support the bill and advocates say the sugar tax will deter consumers from buying drinks that contribute to obesity.
The main problem with the beverage tax is that retailers have threatened to shift expenses onto other products, effectively masking the hike.
Fisher acknowledged in committee that there isn’ t an obvious way to prevent this, but suggested that the bill note for the record that lawmakers’ intent was to raise the prices of sweetened beverages.
‘ Our goal is that this excise tax show up at the point of sale, that consumers see it when they’ re reaching for a bottle of one drink rather than another,’ said Fisher. Asked how that’ d be achieved, he replied: ‘ That’ s one of the puzzles.’
He added that for large beverage firms that sell a variety of products, it could be an opportunity to promote sales of healthier products.
Rep. John Mitchell, R-Fairfax, who voted against the provision on Wednesday, supports ending the employer assessment, but objects strongly to the beverage tax.
‘ Having been in my career for 40 years, an operator of convenience stores and a gasoline wholesaler, all it does is add to the cost of products unnecessarily,’ said Mitchell of the tax. He added that it would make border retailers uncompetitive.
Others testifying today had different objections. Scott Drenkard, an economist with the nonpartisan Washington, D.C.-based tax research group the Tax Foundation, told VTDigger he is skeptical of the efficacy of the tax.
‘ The effect on obesity outcomes is questionable,’ said Drenkard. ‘ There is some evidence that especially adolescents are just substituting calories from other sources.’
Drenkard has written reports outlining the experience of other states on the issue.
The policy approach is strewn with conflicting studies and disagreeing academics, as VTDigger has previously reported.
Andrew Meehan, a lobbyist for the Beverage Association of Vermont, was disappointed by the House Health Care Committee’ s decision. ‘ This is a situation where they’ re singling out one industry,’ Meehan said. ‘ It’ s not going to get to the root cause of obesity, and there isn’ t a direct connection. I think the committee was shown abundant evidence that items that were higher calories, higher fat content, are not taxed, and sugar-sweetened beverages are.’
The tax has cleared a first hurdle and still faces political uncertainty. If it passes House Health Care on Friday, it faces a key vote in House Ways and Means, and then must beat back opposition from the Democratic and Republican legislative leadership and the Shumlin administration.
At a press conference on Wednesday, Gov. Peter Shumlin reiterated his opposition to the proposal. ‘ My real concern about the sugar sweetened beverage tax is asking low-income Vermonters to pay more when they can’ t afford it,’ Shumlin said. ‘ I don’ t think you’ re going to change behavior. If soda is going to cost you 12 cents more in the store it probably won’ t dissuade you from buying soda it will just cost you 12 cents more.’
The governor said Republican governors across the country are looking to shift away from income taxes to consumption taxes like the sugar sweetened beverage proposal. ‘ We have a number of governors ‘¦ who want to eliminate income and corporate taxes and move to consumption taxes where 80 percent people will see a huge tax increase and the wealthiest will see a huge tax cut.’
What the beverage tax revenue will be applied to is up in the air. Fisher affirmed that at least some revenue would pay for health care initiatives. Low-income advocates previously stressed that subsidizing healthy groceries, among other measures, help make the tax less regressive.
If the tax is an effective behavioral deterrent, it would raise less revenue over time.