Soda tax may be getting the axe in Colorado
Soda tax repeal: A proposed repeal of the soda tax in Colo. could save soda drinkers 2.9 percent but cost the state $12.3 million.
Coke, Pepsi and other soft drinks would get a little cheaper in Colorado under a Republican plan to repeal sales taxes on soft drinks, but the proposal faces an uphill climb against the state's budget crunch and rising obesity rate.
Coloradans didn't pay the 2.9 percent sales tax on sodas until March 2010, when lawmakers looking for money and ways to confront obesity levied the tax on soft drinks and candy. The often-sugary items previously were considered foods exempt from state sales taxes.
The proposal before a House committee Wednesday takes aim at the soda tax — but leaves the candy tax in place. Rep. David Balmer of Centennial says his bill will help struggling families save a few pennies at the grocery store.
"The tax is falling on families all across Colorado, and I don't believe the Legislature should be singling out certain beverages and taxing them," Balmer said.
He pointed out that diet sodas are a healthier choice than some sugary juices and sports drinks.
"It's unfair to tax soda," Balmer argued.
The proposal has the support of the powerful Colorado Beverage Association, which represents vending-machine operators and the bottlers that deliver products from companies like The Coca-Cola Co. and Pepsico Inc. CBA's executive director, Chris Howes, says the Legislature acted irrationally when it repealed the sales-tax exemption for candy and soda.
"It inexplicably just picked out two items and said, 'These are the ones we want to tax, these are the ones making people fat, not potato chips, not ice cream,'" Howes said. "We've never understood why soda, this one item, was picked out of all the items in the grocery store."
Opponents say the tax repeal would cost Colorado an estimated $12.3 million next year, and more in future years, and a prominent Colorado nonprofit that works to reduce childhood obesity supported last year's sodaand candy taxes and is expected to oppose this year's proposed repeal.
Some health advocates, though not all, have argued for higher taxes on some unhealthy foods to decrease their consumption and raise money to cover higher health costs attributed to being overweight.
A 2009 review in the New England Journal of Medicine urged states to raise taxes on sugar-sweetened beverages such as soft drinks. Kelly Brownell, of Yale University's Rudd Center for Food Policy and Obesity, has argued prominently for higher soda taxes, saying they reduce consumption while raising awareness and money for health education.
Not all researchers agree. A study published last year by the Rand Corp., and funded by the federal government and the Robert Wood Johnson Foundation, reviewed soda taxes in 40 states and concluded that small taxes, of a few cents per serving, do little to reduce soft drink consumption or prevent childhood obesity.
But Democrats have vowed to fight getting rid of the tax. They point out that Colorado is facing a deficit and shouldn't be waiving taxes on non-essentials like candy and soda.
"When you're trying to decide if we should put money into books and pencils for kids or subsidizing soda for kids, it's a pretty easy call," said Rep. Mark Ferrandino, D-Denver.
Republicans in Colorado are pushing to repeal several other taxes, not just the soda tax. Last year, Colorado also restored sales taxes on pesticides, computer software and material used in direct-mail advertising.
Balmer said he opposes the other taxes, too, but decided to focus first on soda because it's a basic grocery item for many.
"I don't agree with the social engineering that the Democrats employed last year," Balmer said.