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Thursday, March 20, 2014 12:01 am

The soda sin tax

Illinoisans could end up paying a tax on their sugary drinks that would fund education about the risks of obesity.

State Sen. Mattie Hunter, D-Chicago, is sponsoring a bill she introduced in February that would impose a penny-per-ounce sugary drink tax. The tax would apply to every ounce of “sugar-sweetened beverages,” such as soda, energy drinks and sweetened teas. The tax would also apply to each ounce of syrups or powders used and sold to make the sugary drinks. Whether a person is buying a bottled soda from a vending machine or ordering a beverage from a restaurant, the tax would apply.

The cost would thus translate into 16 cents more for a 16-ounce fountain beverage, or $2.88 for a 24-pack of 12-ounce soda cans.

Hunter said the tax is all about education. The legislation, which has been labeled the Healthy Eating Active Living (HEAL) Act, is being backed by Hunter, the Illinois Alliance to Prevent Obesity and six other Senate cosponsors. The bill aims to decrease obesity rates, especially among children, by deterring sugary drink consumption.

Between 2011 and 2012, about 34 percent of Illinois children were overweight or obese.

“It’s going to take a while to get that number down,” Hunter said. “We do believe that if we reduce the number of sugary drinks that it would definitely have a major impact on reducing obesity. That’s the major culprit – sugar.”

Hunter said economists have predicted this tax alone would reduce obesity by 9.4 percent in its first year. She said the penny-per-ounce amount is designed to be enough to both influence consumption and raise funds to reinvest in education about healthy living practices and obesity prevention.

“The bill will be the first of this kind in the nation,” she said.

The tax is estimated to raise $600 million for two purposes. Half of the funds would go to additional Medicaid funding for low-income families, and the other half would go into a new Wellness Fund that would finance health-related programs such as more physical education in schools, community gardens, walking paths and education on preparing healthy meals.

The bill is being supported by several groups such as the American Cancer Society and the Ounce of Prevention Fund. Even so, it’s a new tax and taxes are unpopular.

Because the tax is intended to discourage a behavior perceived as unhealthy, it falls in line with the category of taxes called “sin taxes,” such as those imposed on tobacco or gambling.  

Julian Reif, an expert at the University of Illinois Institute of Government and Public Affairs, has covered sin taxes in his classes. He called the soda tax the “next frontier” of sin taxes.

A key question when it comes to reducing obesity through a tax, Reif said, is whether it will actually work.

“A worry is that … a lot of individuals may just substitute other forms of junk food,” he said.

Another concern is that the tax is regressive, which means it would place a greater burden on lower-income individuals than wealthier people.

Hunter, the bill sponsor, said that a regressive tax may be what it takes to deter consumption, however. She said three times as many poor children are obese compared to wealthier children and twice as many poor adults have diabetes compared to wealthier adults.

“Instances of obesity and diabetes among low-income families … that’s what’s really, truly regressive,” she said.

In the weeks since Hunter unveiled the plan, the alliance has heard dissent from private industry organizations such as the Illinois Manufacturers’ Association. The IMA is opposing the tax on the grounds that it would have a negative impact on Illinois’ manufacturing, agriculture and transportation.

Hunter, however, said the beverage industry is targeting low-income and minority populations that are most at risk for obesity as a result of sugary beverage consumption. This tax is a way to help counterattack that.

“Once we educate people, we’ll leave it up to them whether they want to purchase these drinks or not. They will continue to have a choice,” she said.

If passed, the tax would go into effect on Jan. 1, 2015.  

Contact Lauren P. Duncan at intern@illinoistimes.com.

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