New Soda Tax Idea Reignites an Old Debate


Citing California’s huge budget shortfall and its growing number of overweight children, a state lawmaker is proposing a new tax on soda to fight childhood obesity.

The idea is given little chance of passing, at least not in this election year, but it’s reigniting an old debate at the Capitol about the proper role of tax policy as a social engineering tool.

The California Soda Tax Act by Sen. Deborah Ortiz (D-Sacramento) is seen as the leading edge of a broader initiative to tax or levy fees on a variety of eating and drinking habits.


One lawmaker, in fact, has introduced a bill to study taxing a wider range of junk food to finance health programs for children. Another may try to impose a fee on retail sales of alcoholic beverages to bolster trauma rooms.

Assemblyman John Campbell (R-Irvine) described the soda proposal as the latest attempt to demonize a legal product to justify increasing taxes. Targets of so-called sin taxes have traditionally included tobacco, alcohol and gambling.

“Where will this ever stop?” asked Campbell, a self-described soda abstainer who handles budget matters for his caucus. “Are they going to tax the butter on my carrots because carrots are healthier without butter?

“I think if you ate too much tofu it’s probably bad for you, so does that mean we should tax tofu in big jars?”

Ortiz’s plan would impose a surtax on distributors of soda and other sweetened drinks--but not diet beverages--at a rate of about 2 cents per 12-ounce can. She said the tax could raise as much as $300 million a year.

A more traditional sin tax is also under consideration this year as state officials attempt to close a projected $17.5-billion budget shortfall. Ortiz wants to raise the state excise tax on a pack of cigarettes by 65 cents to $1.52, which would give California the highest tax of that variety in the nation.


But it’s the soda tax that has ignited a lively discussion, as Ortiz hoped it would.

Reducing childhood obesity, she contends, should be one of the major policy objectives in California. She believes that the increased prevalence of the condition is being fueled by young people consuming more sweetened drinks and less milk.

“In this culture of the ‘Big Gulp,’ it’s really quite alarming,” said Ortiz, chairwoman of the Senate Committee on Health and Human Services and another soda abstainer. “I don’t think there’s any one staple of a child or teenager’s diet that is so utterly devoid of any nutritional value as soda.”

Sean McBride, a spokesman for the National Soft Drink Assn., countered, “It’s overly simplistic to say if we eliminate soft drinks from the food supply that people will be healthy.”

McBride offered an alternative to the big-government approach to diminishing childhood obesity: 30 minutes of exercise a day and a balanced diet.

He cited Arkansas, Washington and West Virginia as states that impose special or excise taxes on soft drinks. In California, only sales taxes are now applied to carbonated beverages.

Advocates of Ortiz’s proposal cite a changing environment as cause for government intervention.

Children are spending too much time staring at video game, computer and television screens, they say. At the same time, young people are being bombarded by attractively packaged foods with poor nutritional quality.

“You can’t just hold an individual responsible when we’ve created an environment that supports the genetic expression of obesity,” said Joanne Ikeda, a nutrition specialist in UC Berkeley’s department of nutritional sciences.

“The whole childhood obesity problem is based on the myth that just fat kids have problems,” said Ikeda, an advisor to the National Assn. to Advance Fat Acceptance, a group dedicated to improving the quality of life for fat people.

“The truth of the matter is all children, regardless of their size and shape, are practicing poor lifestyles in terms of health.”

In California, an estimated 30% of children are overweight or at risk of being overweight, with as many as half of all children in some school districts weighing too much, said Harold Goldstein, executive director of the California Center for Public Health Advocacy.

“What this means about future rates of heart disease, cancer, diabetes and stroke is staggering,” he said. “We’re sitting on a time bomb.”

The soda tax idea builds on a junk-food bill by state Sen. Martha Escutia (D-Whittier), also proposed as a way to combat childhood obesity.

Approved by the Legislature last year, the measure mandates that foods sold at elementary and middle schools meet certain nutritional requirements, among other changes, by 2004.

Consumption Not Seen as Dropping Sharply

Ortiz said she does not expect a new tax on soda to drastically reduce its consumption in California. She said her key goal is to raise money to help get schools out of the business of selling soda and junk food to children to fund programs.

Money from the tax also would be used to teach children to care for their teeth as well as to treat and prevent obesity by educating them about nutrition and getting them involved in physical activities.

“They need labor-intensive programs that require them to learn new habits and include repeated visits,” said Dr. Lynda K. Fisher, a pediatric endocrinologist at Childrens Hospital Los Angeles.

Ortiz has also drawn the ire of the tobacco industry for proposing the cigarette tax increase. She said that proposal could raise $800 million for tobacco education, cancer research and medical services for the working poor. The plan is supported by a variety of health groups.

“It would pour revenues to those programs that need to be done better,” said Ortiz, a former smoker.

Brendan McCormick, a spokesman for Philip Morris USA, said tobacco taxes are not a long-term solution to the state’s fiscal problems, particularly when it comes to health care programs. Using a declining revenue source to fund programs with increasing costs doesn’t add up, he said.

“If programs are worth funding for the broader population, they should have a broader-based funding source, rather than singling out smokers,” McCormick said.

Three states--Connecticut, New York and Utah--have raised state excise taxes on cigarettes this year, he said.

The tobacco and soda taxes are regressive, which means that lower-income families would bear a relatively higher share of the burden, said Jean Ross, executive director of the California Budget Project, a group that advocates for the poor during the budget process.

Still, Ross described Ortiz’s proposals as a logical response to a politically difficult situation: trying to fund worthy programs in lean fiscal times.

Mustering the political will to raise taxes is considered a longshot around the Capitol because it is an election year and because Gov. Gray Davis, who is seeking a second term, has repeatedly said he will do his best to avoid tax increases.

Nonetheless, lawmakers are not stopping at soda and cigarettes as possible tax targets.

To address concerns that California students are struggling at school because they are sick, lawmakers led by Assemblywoman Wilma Chan (D-Alameda) are pushing a package of proposals to improve their health.

Chan has introduced a measure that would require the state to study the feasibility of taxing junk foods to pay for dental and health services for children.

Minnesota charges sales taxes on candy, chewing gum and ice cream, and Texas imposes them on candy, Goldstein said.

Californians, however, have not responded kindly to similar taxes. It took infuriated voters less than 15 months to repeal a so-called snack tax that state officials imposed on snack food, bottled water and candy. Revenues from the sales tax were used to help close a $14-billion state budget shortfall in 1991.

State Sen. Gloria Romero (D-Los Angeles) said she may try to impose a fee on the retail sale of alcoholic beverages to help fund trauma centers. To draw a nexus between alcohol consumption and trauma centers, she has cited a court ruling that fees imposed to mitigate harm done by sellers of a product are reasonable.

Not everyone buys the connection, however.

“I think it’s an unfair tax,” said Sy Fried, president of the Wine & Spirit Wholesalers of California. “Why should alcohol support a trauma caused by drugs?”

Larry McCarthy, president of the California Taxpayers Assn., said he does not believe that Romero’s proposal bears any of the characteristics of a fee, which he contends should not finance a general government service that provide benefits to the broader community.

The thread that connects proposals by Chan, Ortiz and Romero, he said, is that they all send a chill through the state’s business community.

“It sends a really damaging signal about California,” McCarthy said. “That kind of signal scares investment away.”