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Congress May Tax Soft drinks, Beer & Wine

  • Spence Cooper
  • May 20, 2009
Some typical alcoholic beverages.
Taxing Alcoholic Beverages, What will be the Outcome?

To help fund Obama’s plan to overhaul health care, the Senate Finance Committee has aimed their sites on levying a federal excise tax on “sugar-sweetened drinks” and alcoholic beverages.

The committee believes these taxes would “nudge consumers away from products deemed likely to boost health costs, including alcohol and sugary sodas. The committee is considering a uniform excise tax of $16 per proof gallon for beer, wine and other alcoholic beverages. Another option would be to place a federal tax on drinks sweetened with sugar or high-fructose corn syrup”.

Jeff Becker, president of the Beer Institute in Washington claims an increase in alcohol taxes “threatens jobs in an industry that already paid $41 billion in taxes in 2008.”

“That would be a big hit to the hospitality industry which makes an awful lot of its profits from the sales of beverage alcohol,”said Mark Gorman, a lobbyist for the Distilled Spirits Council. “We’re already the highest taxed consumer product in the country other than tobacco. It’s going to be a hard hit to take”

Dr Thomas R Frieden, the Health Commissioner for the City of New York, now Director of the U.S. Centers for Disease Control and Administrator of the Agency for Toxic Substances and Disease Registry, previously suggested taxing sweetened beverages earlier this year. He was joined by Dr. Brownell, a professor and director of the Rudd Center for Food Policy and Obesity at Yale University.

According to a comment by Dr. Brownell in The New England Journal of Medicine, forty states already have small taxes on sugared beverages and snack foods, but in the past year, Maine and New York have proposed large taxes on sugared beverages, and similar discussions have begun in other states.

“It defies both science and common sense,” said Susan Neely, President of the American Beverage Association, “to think singling out one product as a unique contributor to obesity will make a dent in the problem.”

Frieden and Bronwell:

“Americans consume about 250 to 300 more calories daily today than they did several decades ago, and nearly half this increase is accounted for by consumption of sugared beverages; and though no single intervention will solve the obesity problem, that is hardly a reason to take no action. Sugared beverages are marketed extensively to children and adolescents, and in the mid-1990s, children’s intake of sugared beverages surpassed that of milk. A penny-per-ounce excise tax could reduce consumption of sugared beverages by more than 10%. It is difficult to imagine producing behavior change of this magnitude through education alone, even if government devoted massive resources to the task.” — Medical News Today

The notion of levying a tax on sugar and alcohol goes back centuries – at least to Scottish economist Adam Smith. In The Wealth of Nations Smith writes: “Sugar, rum, and tobacco are commodities which are nowhere necessaries of life, which are become objects of almost universal consumption, and which are therefore extremely proper subjects of taxation”.

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