New York Governor David Paterson resurrected the idea of a tax on sugared beverages last week a year after the city rejected a similar proposal. But this time around the idea has added financial impetus as the city has a $7.4bn budget gap between revenues and spending to close.
Bloomberg praised the new soda tax proposal calling it a “far-sighted” move that will help stem the obesity problem and provide much needed revenue.
Yesterday, he told a state senate committee: “Today, more than half the residents of New York City, and nearly 40 percent of our public school students, are overweight, many of them seriously so. That puts them dangerously on track to contracting diabetes, high blood pressure, heart disease, asthma, depression, and other serious health problems later in their lives.
“It’s in the interest of us all to prevent that from happening now - and the surest pathway to changing behavior is through the wallet.”
Political enthusiasm for the soda tax was juxtaposed with dismay from the US soda industry. The American Beverage Association (ABA) attacked the proposal, drawing particular attention to a comparison to the level of tax levied on alcoholic drinks.
“What’s particularly disconcerting about this proposal is that the tax on a 12-pack of non-alcoholic beverages, like soft drinks, would be more than 9 times higher than the state tax on a 12-pack of alcoholic beverages, like beer,” said the ABA.
The trade body also said the soda tax would be a financial burden for families and threaten jobs in the beverage industry.
One area of particular disagreement between proponents of soda taxes and their critics surrounds the impact tax has on behaviour. While Bloomberg says the best way to change behaviour is through the wallet, the ABA argues that tax has only a small effect on consumption.
The trade body cited a review by George Mason University researchers indicating that a 15-cent tax added to a 75-cent soda (a 20 percent tax hike) would decrease Body Mass Index by 0.02 - from 40 to 39.98. It called this a miniscule change that is not even measurable on a bathroom scale.
But since New York abandoned the idea of a soda tax a year ago the political will to introduce one has increased. The idea still marries a public health justification to increased public revenue but this time around New York is in desperate need of extra cash.
In adddition, Mississippi and California have taken steps in the direction of a soda tax over the last 12 months and President Barack Obama has even put his weight behind soda tax calling it “an idea that we should be exploring”.