New York Governor Unveils Beverage Tax

Published April 1, 2009

Among scores of tax and fee hikes proposed by New York Gov. David A. Paterson (D) is one he says will fight obesity: a tax on sugared soft drinks.

His five-point plan, unveiled in January, includes a ban on “junk” food sales in state schools and “placing a tax on sugared beverages like soda.” Diet drinks would not be assessed the tax.

“In 1970, the average New Yorker drank the equivalent of about five cans of soda a week. Today, the average New Yorker drinks the equivalent of 11 cans a week,” the governor said in a press statement. Paterson estimates “an 18 percent tax on these beverages will reduce consumption by 5 percent,” while sending big money into the state’s coffers.

Product Singled Out

The Business Council of New York State opposes the tax.

“The ‘soda tax’ is nothing but a new sales tax that singles out one product category. Singling out one beverage or food product for higher taxes makes no sense,” said Kenneth Adams, president and CEO of The Business Council.

The estimated $404 million the tax would raise annually could help close the current state budget deficit, but the governor instead says the money “will go toward funding public health programs, including obesity prevention programs, across New York State.”

“This is purely a money grab, and at the worst time for middle-class families,” said Craig Stevens, vice president of communications for the American Beverage Association, another industry organization opposed to the new tax.

Public Strongly Opposed

Polls taken in New York show strong opposition to the soda tax idea.

A Quinnipiac University poll showed 60 percent of New Yorkers oppose such a tax, while 37 percent support it. The American Cancer Society and American Diabetes Association, among other groups, support the proposal.

Stevens noted a nationwide Rasmussen Reports survey showed 70 percent of Americans oppose a national tax on non-diet soft drinks, while only 18 percent support the idea of a tax like the one proposed by Paterson.

In his State of the State Address, Paterson acknowledged New York’s budget deficit “has been growing by millions of dollars a day.” A decision on the state budget is expected by April 1, the beginning of the new fiscal year.

John W. Skorburg ([email protected]) is associate editor of Budget & Tax News and a policy advisor to The Heartland Institute.