The Washington D.C. Council has voted to include sweetened soft drinks in its six percent sales tax bracket to help bridge the city’s half-billion dollar gap between spending and earnings.
A soft drinks tax has been vigorously opposed by the beverage industry – as well as by many consumers – as similar local-level taxes have been elsewhere in the country. In D.C., the Maryland-Delaware-D.C. Beverage Association has set up an organization called ‘No D.C. Beverage Tax’, a coalition of local Washington D.C. citizens, businesses, and associations that are opposed to a new tax on beverages. The coalition has argued that a beverage tax is ‘discriminatory and regressive’, and that it would cost jobs.
The six percent sales tax would apply to artificially and sugar-sweetened soft drinks, including sodas, sports drinks and energy drinks, but not drinks containing milk, juice, coffee or tea. It is different from a previously proposed soft drink tax in D.C., which would have put a penny-per-ounce excise tax on soft drinks.
The tax is expected to raise about $7.92m a year. The final vote on the 2011 budget is scheduled for next month, before being sent to the mayor and Congress.
Soda taxes have been a controversial issue across the country, with advocates claiming that they could help tackle obesity while raising revenue to pay for health care reform or health promotion programs – or shrink budget deficits. But a proposed federal-level soda tax was left off the agenda in February, and just last week a proposed two-cent-per-ounce soda tax in Philadelphia was shelved.
However, several other states have gone ahead with soda tax proposals. New York governor David Paterson revived the idea of a penny-per-ounce tax on sugary drinks in January, as the city looked for ways to close its budget gap. Mississippi’s state representative John Mayo introduced legislation to tax the syrup used to sweeten soda at a distribution level in January. In Kansas, Senator John Vratil put forward a proposal for a penny tax per teaspoon of sugar in soda, and Colorado has removed existing tax breaks on sugary beverages and candy.