1-23-15 – Supporters of Sugary Beverage Tax Don’t Understand How it Works – Or That It Won’t.

Posted by Rob Roper

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You’ve probably heard the ads on the radio featuring people proclaiming the evils of soda, juices, sports drinks, teas, etc. that are sweetened with added sugars. These folks are advocating for a 2¢ per ounce excise tax on such products.

The theory is that by making sugary drinks a more expensive option, folks will choose less expensive, healthier options when making their purchases. By virtue of those choices, the obesity crisis will be solved, or at least mitigated.

The costs do appear daunting. The tax is estimated to cost Vermonters over $30 million per year. 2¢ per ounce translates into a 24% tax on a one dollar 12 oz. soda. Rep. Doug Gage (R-Rutland) who works for Coca Cola, outlined one scenario in which a 2 liter bottle of soda, on sale for 99¢ at the grocery store, would be taxed at a rate of 134% ($1.34 per bottle!)

However, this is not how the tax works in practice. It is an excise tax levied on the distributor, not the consumer at point of purchase. The distributor, once taxed, can then pass the cost of the tax along to ALL their customers over ALL of their products, not just those who purchase sugar sweetened beverages. So all this tax will ultimately do is raise the price of ALL drinks — for everybody – by $30 million plus.

Such higher costs also have the potential to drive more business across the Connecticut River to glorious, tax-free New Hampshire.

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{ 1 comment… read it below or add one }

Jim BUlmer January 24, 2015 at 10:02 pm

What are the proceeds from this tax going to be used for? Will it be used to fund another unneeded bureaucracy?

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