NASHVILLE, Tenn. (AP) — A House panel has parked a bill to exchange a reduction in Tennessee’s sales tax on groceries with an increase in the tax on sugary drinks.
The House Finance Subcommittee placed the measure sponsored by Democratic Rep. Mike Steward of Nashville among bills to be considered after the rest of the state’s budget plan has been worked out, meaning it’s unlikely to pass this year.
The projected $92 million the state would collect through a 1-cent increase on each ounce of sweetened drinks like Coke or Pepsi would offset the lost revenue from lowering the tax on groceries by 1 percentage point to 4.5 percent.
But local governments would lose about $3 million in state-shared taxes by the change, causing the panel to halt the bill’s progress.
The following release has been sent as a response to the previous posting of a release from the House Democratic Caucus by the Beverage Association of Tennessee:
The Beverage Association of Tennessee opposes HB 0537 because it subtlety and mistakenly joins the popular belief that our products are the chief or principal cause of the obesity issue and the peripheral health issues of diabetes, heart disease and stroke with a tax policy to alter social behavior.
The proponents state, “Families have to buy food, but they can cut back on non-essential items like soda when times get tough,” It is offensive, arrogant and insulting to Tennessee shopper’s to argue that they need the government to tell them what is essential or non-essential when it comes to their personal grocery purchases and health.
Calories from sugar-sweetened beverages–including soft drinks, juice drinks, flavored waters and other beverages–make up only 7 percent of the calories in the American diet. That means 93 percent of the calories come from other foods and beverages.
According to a 2005-2006 National Cancer Institute analysis of National Health and Nutrition Examination Survey (NHANES) data.
In keeping with the belief that nutrition and physical activity are equal components in insuring a healthy Tennessee, we strongly believe that the issue needs to be balanced in its approach. We believe “It’s not the soda-it’s the sofa! It’s not the cola-it’s the couch!”
While beverages and food play a role in determining good health, so do other important factors to address obesity, which among them should be to focus on energy balance — helping Tennesseans balance calories consumed with calories expended.
The soft-drink industry is acting responsibly by responding to consumer demand by providing a myriad of beverage choices in a wide array of calorie ranges. In fact, from 1998 to 2008, the industry cut the total beverage calories it brought to market by 21 percent, through the innovation of more no- and low-calorie beverages and smaller-portion options.
Lastly, in the past three years there have been studies addressing the concern over the rising obesity in pets. We do not believe we have seen Barney the Beagle, Suzy the St. Bernard, or Felix the cat laying around guzzling soft drinks and getting obese. They are obese because their owners/masters feed them too much and exercise themselves and their pets too little.
From the House Democratic Caucus:
NASHVILLE (March 28, 2011) – We need to get rid of Tennessee’s tax on food and HB 537 is a step in the right direction.
HB 537 offers a simple trade – cut Tennessee’s food tax – one of the highest in the nation – and pay for it with a tax on sugar sweetened beverages, which have been linked by many experts to the epidemic of childhood obesity.
“Families have to buy food, but they can cut back on non-essential items like soda when times get tough,” said the bill’s sponsor, State Representative Mike Stewart.
Even with the proposed tax, soda would remain cheaper than it was in the 1970’s, adjusted for inflation. “With the use of high fructose corn syrup instead of cane sugar, the price of soda has come way down whereas the price of food is going through the roof. This is one way to help a young family buy food without imposing a new tax on businesses that might hurt the economic recovery,” Stewart observed.
Additionally, studies show that much like the increase in the cigarette tax this would likely lower consumption and improve health, an increase in soda taxes also can lower the obesity rate for high risk children.
The fiscal note for the bill shows that the proposed 1% reduction in Tennessee’s food tax, which would reduce Tennessee’s rate to 4.5%, would be entirely paid for by the increased tax on sugar sweetened beverages. Beverages that are not sugar sweetened, such as diet sodas, would be taxed less under the proposed change. “For most families, this will be a well-deserved tax break,” Stewart noted.
The bill is scheduled to be heard in the House Budget Subcommittee on Wednesday, March 30, 2011 at 11:00am.