New York Governor proposes revised ‘soda tax’

by Eric Schroeder
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NEW YORK — New York Governor David Paterson on May 20 proposed eliminating the state and local sales tax on low-calorie soda, while adding a new tax to full-calorie drinks.

“The governor’s revised sugar sweetened tax package will result in lower revenues but will be even more effective in fighting the obesity epidemic because the price differential between the high sugar-high calorie and low sugar-low calorie beverages will widen and encourage consumers to make healthier choices,” the governor’s office said.

According to the governor’s office, the revised sugar sweetened tax package would generate $815 million annually, down from the $1 billion that would have been raised as part of Governor Paterson’s original proposal that was rejected by the state legislature amid strong opposition by the beverage industry.

The difference between the two proposals is that in the new version, low-calorie sodas (10 calories or less per 8-oz serving) and bottled water would be exempt from state and local sales tax, while beverages with more than 10 calories per 8-oz serving, including coffee and tea bottled as a liquid, would be subject to expanded state and local sales tax. Low-calorie tea and coffee drinks would not be included in the expansion and would remain exempt from state and local sales tax, the governor’s office noted.

Responding to the revised sugar-sweetened beverage tax, New York City Mayor Michael Bloomberg said, “Our administration strongly supported the proposed tax on sugar-sweetened beverages as a way to combat the obesity epidemic and further support our schools, hospitals and clinics. After listening to concerns raised by the state legislature, Governor Paterson has wisely reframed the measure. By exempting low-calorie beverages from all state and local sales taxes, while also adding a tax on beverages containing more than 10 calories per 8 ounces, he has both expanded the health impact of the measure and addressed concerns of the industry. The new proposal will discourage consumption of high-calorie beverages while simultaneously making lower-calorie beverages more affordable, which will help lead to major gains in public health. I encourage all legislators to take a fresh look at this issue.”

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