Making tax on soda work
April 05,2013
I was intrigued by Monday’s editorial by
Rep. Masland regarding the proposed 1 cent per ounce tax on sugar
beverages. Although the thrust of his article on the need for such a tax
to help parents choose healthier alternatives is right on, the tax must
be collected at the point of sale to provide any meaningful benefit.
Childhood obesity, if not curbed early enough, will lead to many
diseases and significantly higher health care costs. As Vermont moves
towards single-payer health care, we need to make every effort possible
to promote healthy living habits. Unfortunately, these habits can’t be
mandated, but they should be highly encouraged in our children, as well
as adults. Thus meaningful taxation will play an important role and
should be promoted by our Legislature.
MARTY POST
Killington
MARTY POST
Killington
Sugar tax won’t work
April 01,2013
Sugar tax won’t work
There is a growing body of evidence that excess consumption of sugar is responsible for the dramatic increase of obesity in America. Some feel that sugar in highly sweetened beverages, such as soda and some energy drinks, is to blame. So, it is no wonder that there is a move afoot to dramatically tax these beverages. One proposal in the Vermont Statehouse is to impose an excise tax of one cent per ounce of beverage. The hope is that the increased price will cause consumers to buy diet or less sugary drinks.
There are studies showing that Vermonters will change their behavior and that they prefer this tax to others. Studies asked consumers which drinks they would buy based on the assumption that tax would appear in the price on the shelf. But there is not a single study that asks merchants how they will respond.
The problem is that this tax it will not work as planned. Because it is an excise tax it is applied at the wholesale level. The merchant is under no obligation to pass the tax directly to the consumer. Instead, the tax will appear as an overhead expense — part of the cost of doing business — and the tax will be spread over all the products in the store. That will dramatically decrease the likelihood that the consumer will see a significant price difference between sugared and diet sodas. Another significant problem is that very large retailers, the big box stores, have a huge advantage here. They stock thousands of products and can spread the excise tax all around the store, while a small mom and pop store has a much smaller inventory and will have difficulty absorbing the cost. Do we really want to put our small village stores at such a competitive disadvantage? Proponents of the tax say that spreading the tax among other store products is just a threat, but the fact is that merchants already adjust the margins on different products while responding to consumer demand and according to their business plans.
Another argument advanced by sugar tax supporters is to make a comparison with the tax on cigarettes. But this comparison falls short. Cigarettes are known carcinogens and are regulated and taxed differently. The cigarette tax goes directly on the pack of cigarettes and can’t be easily avoided. Further, tobacco taxes have increased so dramatically during the past several decades that the price per pack has skyrocketed. No wonder consumption is down.
Concerning obesity, we should all note that we do not tax salt, a contributor to thirst. The answer — drink more soda or drink more beer in ever larger containers. And we do not tax fat. We do not tax junk food or prepackaged meals that usually contain large portions of salt, fat and sugar. And, we do not tax sedentary behavior, or video games or time in front of the TV. Instead, local producers of fresh local food are overwhelmed by the corporate advantage of huge multi-national corporations. To believe that we can tax sugary beverages in isolation of all other factors and expect a dramatic improvement in obesity and diabetes is quite a stretch.
JIM MASLAND
State representative
Thetford Center
There is a growing body of evidence that excess consumption of sugar is responsible for the dramatic increase of obesity in America. Some feel that sugar in highly sweetened beverages, such as soda and some energy drinks, is to blame. So, it is no wonder that there is a move afoot to dramatically tax these beverages. One proposal in the Vermont Statehouse is to impose an excise tax of one cent per ounce of beverage. The hope is that the increased price will cause consumers to buy diet or less sugary drinks.
There are studies showing that Vermonters will change their behavior and that they prefer this tax to others. Studies asked consumers which drinks they would buy based on the assumption that tax would appear in the price on the shelf. But there is not a single study that asks merchants how they will respond.
The problem is that this tax it will not work as planned. Because it is an excise tax it is applied at the wholesale level. The merchant is under no obligation to pass the tax directly to the consumer. Instead, the tax will appear as an overhead expense — part of the cost of doing business — and the tax will be spread over all the products in the store. That will dramatically decrease the likelihood that the consumer will see a significant price difference between sugared and diet sodas. Another significant problem is that very large retailers, the big box stores, have a huge advantage here. They stock thousands of products and can spread the excise tax all around the store, while a small mom and pop store has a much smaller inventory and will have difficulty absorbing the cost. Do we really want to put our small village stores at such a competitive disadvantage? Proponents of the tax say that spreading the tax among other store products is just a threat, but the fact is that merchants already adjust the margins on different products while responding to consumer demand and according to their business plans.
Another argument advanced by sugar tax supporters is to make a comparison with the tax on cigarettes. But this comparison falls short. Cigarettes are known carcinogens and are regulated and taxed differently. The cigarette tax goes directly on the pack of cigarettes and can’t be easily avoided. Further, tobacco taxes have increased so dramatically during the past several decades that the price per pack has skyrocketed. No wonder consumption is down.
Concerning obesity, we should all note that we do not tax salt, a contributor to thirst. The answer — drink more soda or drink more beer in ever larger containers. And we do not tax fat. We do not tax junk food or prepackaged meals that usually contain large portions of salt, fat and sugar. And, we do not tax sedentary behavior, or video games or time in front of the TV. Instead, local producers of fresh local food are overwhelmed by the corporate advantage of huge multi-national corporations. To believe that we can tax sugary beverages in isolation of all other factors and expect a dramatic improvement in obesity and diabetes is quite a stretch.
JIM MASLAND
State representative
Thetford Center
Tax frustration is growing
April 03,2013
Interestingly, my friend, Rep Jim Masland,
D-Thetford, writes in Monday’s Herald an extended piece about the soda
tax and all the reasons why it won’t work. I happen to agree with him,
but why did he go to all the trouble when this proposal most likely
would not get by the governor anyhow?
This whole thing is nothing more than a smokescreen to attempt to bring attention away from all the taxes he supported and voted for:
1) The 5 cent increase in the education tax which will show up in the next property tax bill in towns all across the state.
2) The gas tax increase.
3) The $27 million in new tax money, which includes increases in rooms and meals, clothing,income, and a host of
other sources, including the so-called cloud tax.
So if all of these items were important enough for Rep. Masland and his Democratic brethren to support and vote for, why not talk about same? Truth is, the voters are beginning to dig in their heels. Why is it a fact that Rutland Town School budget proposals have gone down twice? Answer: The voters read the papers and are frustrated that all this stuff is about to hit real soon, unless Gov. Shumlin gets out his veto pen, which he should do. Tax frustration, pure and simple.
The majority party in the Legislature just doesn’t get it.
JAMES B. HALL
Center Rutland
This whole thing is nothing more than a smokescreen to attempt to bring attention away from all the taxes he supported and voted for:
1) The 5 cent increase in the education tax which will show up in the next property tax bill in towns all across the state.
2) The gas tax increase.
3) The $27 million in new tax money, which includes increases in rooms and meals, clothing,income, and a host of
other sources, including the so-called cloud tax.
So if all of these items were important enough for Rep. Masland and his Democratic brethren to support and vote for, why not talk about same? Truth is, the voters are beginning to dig in their heels. Why is it a fact that Rutland Town School budget proposals have gone down twice? Answer: The voters read the papers and are frustrated that all this stuff is about to hit real soon, unless Gov. Shumlin gets out his veto pen, which he should do. Tax frustration, pure and simple.
The majority party in the Legislature just doesn’t get it.
JAMES B. HALL
Center Rutland
1 comment:
Thanks Marty Post for your comments on this proposed tax. Generally I agree with you. The bottom line on this tax is a sin tax, like those on cigarettes and alcohol. I would rather see this tax than all the others proposed.
Although I believe the government, instead of expanding or trying to maintain its level of spending in spite of economic uncertainty, should live within its means. It should no be further increasing the tax burden on its constituents. Having said that I believe this tax, as Marty pointed out, will have long term impact in reducing health care costs by reducing health care costs related to treating obesity related conditions such as diabetes.
Maybe the mechanics of applying the tax are faulty but I think the general premise is sound.
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