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Proposed Beverage Taxes Face Stiff Opposition

posted on June 5, 2009

Washington » A push for new taxes on soda, beer and wine to help pay for Americans' health care is stirring up more than just the beverage industry.

Advertisers, corn refiners -- even addiction treatment centers -- have mobilized their lobbyists, reflecting how a tax increase for a handful of popular products can reverberate broadly across Washington's interest groups and consumers.

The Senate Finance Committee is considering raising taxes on alcohol and imposing a new levy on soda and other naturally sweetened drinks to help pay for overhauling health care. The committee calls them "lifestyle tax proposals," saying the levies would slow sales of unhealthy products that contribute to rising medical costs.

Soft drink and alcohol lobbyists have snapped into action, though so far their campaigns have been quiet, compared with the blaring, multimillion-dollar battles that typify major showdowns.

Their low-key approach is linked partly to committee leaders' warnings to refrain from public attacks or be accused of sabotaging health care overhaul. They've also held back because they have faced only modest lobbying from tax proponents, and because they think the proposal may prove so unpopular that it ultimately won't threaten their businesses.

Besides alcohol, drinks with sugar, high fructose corn syrup and similar sweeteners would be targeted, though diet drinks with artificial sweeteners would not. Other industries also are on alert, worried that the idea of "lifestyle taxes" could spread to other products deemed unhealthy.

"Are they going to hit couch manufacturers? School districts that have canceled physical education?" joked Neil Trautwein, health care lobbyist for the National Retail Federation, which opposes the plan and whose members include fast-food restaurants.

Sugar producers and manufacturers of sweetened foods are opposed, as are dairy farmers and milk processors, because chocolate milk would be hit. Alcohol retailers want to go the opposite way, pushing for a cut in the existing tax on their products. That tax ranges from 21 cents per bottle of wine to 33 cents per six-pack of beer to $2.14 per fifth of hard liquor.

Even local governments are following developments closely.

Pennsylvania, one of several states including Utah that profit from alcohol because it runs the stores where it is sold, is watching to see how the proposal might affect it.

The Center for Science in the Public Interest, a consumer advocacy group, has been a leading proponent of the taxes. Executive Director Michael Jacobson wrote an op-ed column supporting the levies in the Montana Standard newspaper, in the home state of the panel's chairman, Democratic Sen. Max Baucus.

Waiting in the wings are hospitals, doctors, insurers and drugmakers who could bear the brunt of the $1.5 trillion that Congress' reshaping of health care could cost over the next decade.

Recent history shows the challenge of such taxes. Maine voters rejected a soft drink tax last November and New York Gov. David Paterson dropped a proposed tax on sodas earlier this year. "Before you tax Joe Six-Pack on his beer and Joe Junior on his soda pop at the Little League game, people are going to say, 'Can't you go out and find some savings from'" the health care system, said one committee member, Sen. Ron Wyden, D-Ore.

Tags: food industry money news nutrition