Michael1942's Blog

I have posted most of a recent news story about taxing soda in Illinois> My comments and those of a friend follow the excerpt.
   
”  Sen. Mattie Hunter, D-Chicago, and Rep. Robyn Gabel, D-Evanston, filed the Healthy Eating and Active Living Act in the Senate and House last week that would impose a 1-cent-per-ounce excise tax on regular and diet sodas, beverages that are less than 50 percent juice, sports drinks and ready-to-drink coffees and teas.

A Cook County Department  of Public Health study published in 2011 estimated that at current consumption levels, a penny-per-ounce excise tax on sugar-sweetened  beverages in Illinois could generate more than $600 million and cut statewide  consumption of those beverages by almost 150 million  gallons.

Other estimates in the study suggest that the tax could play a role in a reduction  of as many as 3,400 new cases of diabetes each year, saving up to $20.7 million in diabetes-related health-care costs. Obesity-related healthcare  costs could be reduced by more than $150 million.

At least half of the revenue  generated from the tax would be set aside to shore up Medicaid, which has been the victim of recent funding cuts. The other half would go to education and prevention programs that aim to curb obesity, diabetes and other illnesses.

The bill calls for the formation  of an advisory board tasked with deciding which programs would get grant money generated by the tax.

Gabel said the board would include representatives from the State Board of Education, the Illinois Department of Public Health and other health organizations.

Pass-along costs?

Since the legislation was announced Wednesday, Hunter said she’s added four chief co-sponsors to the bill in the Senate.

But as support picks up steam, business groups with ties to the beverage industry are lining up in opposition.

“We’re not just going to sit back, we’re going to be aggressively opposing the bill,” said Illinois Beverage  Association executive director Timothy Bramlet, who noted that the industry had already taken its first step in the fight by forming the Illinois Coalition Against Beverage Taxes.

The coalition argues that the added expense to distributors  would put already-thin margins in danger. In addition,  the tax would get passed along to consumers who would see a bump in shelf prices for sugar-sweetened beverages.

If fewer people decide to purchase those drinks, opponents  say producers will have no choice but to respond to a shrinking market by slashing jobs.

Bassler said the decision was made to push for an excise tax rather than a sales tax because research shows sales taxes don’t achieve the desired effect.

“One important distinction is that (the research) authors and economists articulate that a sales tax doesn’t have an impact on consumption,” she said.

One of the Cook County study’s authors, Dr. Frank Chaloupka, professor of economics  at the University of Illinois-Chicago, said, “Sales taxes aren’t really apparent to consumers” because they’re relatively low. He said that by the time consumers check out at a register, a sales tax isn’t enough to cause them to rethink the decision to buy something.

Excise taxes, on the other hand, are built into the retail price and could dissuade consumers from making the purchase in the first place, he said.

For example, under the act, a 24-pack of soda would cost an additional $2.88 — and that’s before the 6.25 percent sales tax Illinois already tacks onto soda.

Get people talking

Despite the additional revenue, agencies in line to receive grants generated by the tax wouldn’t be able to count on stable revenue year over year.

If the HEAL Act is passed into law, and if the law works as intended, consumption of sugar-sweetened beverages will fall, bringing revenue generated from the tax down with it.

Gabel said she’s prepared to tell public health personnel  that could be the case. It shouldn’t be a problem, she said, because workers in that sector have become accustomed  to such uncertainty.

“It doesn’t worry me,” Hunter said. “The more people we educate and the more they take the products out of their diet, we can focus on the folks who need the most assistance.”

Hunter said that even if the law works perfectly, some people will still drink sugarsweetened  beverages.

“That’s on them. They still have that choice,” she said.

At any rate, Hunter and Gabel expect a long and difficult fight.

“My experience with bills that have a lot of opposition is that in the first year, it’s hard to get them out of committee,”  Gabel said.

However, the effort will get people talking about the issue, she said.

“As people recognize sugarsweetened  beverages as one of the main sources of added calories and sugar in our diets, they’ll become more sensitive to it,” Gabel said. Contact Tobias Wall: 782-3095, toby.”

My comment when I passed this on:
What happens when the sales of sweetened drinks drops and the revenue is still needed for what ever purpose the taxes will be used for? Illinois doesn’t have a great track record for managing funds.

These  are comments from a friend who once lived here in Illinois along with a connection to the full article on legalized marijuana and its benefits to the communities that have legalized it.

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