Tuesday, January 19, 2010
New York proposes cuts, taxes and fees to balance its budget, including soda tax
by Larry Geller
New York State expects a $7.4 billion deficit this year, and like other states, is searching for ways to balance its budget.
But New York is trying to preserve its values as it deals with its budget crisis (unlike Hawaii).
[Governor] Paterson’s plan would cut school aid by 5 percent in a state with the highest per capita spending on education. It would also slow the growth of spending on Medicaid, reduce $1 billion from spending on state agencies and eliminate $300 million in undesignated annual aid to New York City.
But New York is avoiding harsher medicine. Mr. Paterson has made no significant cuts to the state’s workforce and even made assurances to union leaders that he would not seek layoffs this year, a risky move as the state faces huge deficits in the coming years. [New York Times, Paterson Budget Seeks $1 Billion More in Taxes and Fees, 1/19/2010]
Paterson includes a soda tax in his proposal:
He proposed raising $1.1 billion by hiking taxes and fees, including a $465 million excise tax on the syrup that sweetens soft drinks, a $1-per-pack cigarette tax that would raise $210 million and a $216 million levy on healthcare providers.
Justifying the soda and cigarette tax hikes, Paterson said the state spends $16 billion a year on healthcare for smokers and people with obesity-tied diseases, such as diabetes. [Reuters, Governor Paterson seeks $136 billion budget, non-diet soda tax, 1/19/2010]
Admittedly, some of the other measures NY will take would not be palatable here, but let’s look for a moment at the soda tax.
Using the Revenue Calculator for Soft Drink Taxes at the Rudd Center for Food Policy and Obesity website, for New York State, $465 million would correspond roughly to a tax of .425 cents per ounce of sugary beverages. Taxing at that rate would bring in $32 million for Hawaii because of our lower population (tourist guzzling would bring in more).
Hawaii could get $91 million with a two-cent tax per ounce of sugar beverages, or by including both sugar and diet beverages, we could realize $169 million.
Of course, Hawaii could also expect what New York hopes for, which is a reduction in obesity-tied diseases.
Soda companies are good corporate citizens. They employ people in various communities and give to those communities in times of need. One of the first companies to respond to the tragedy in Haiti was Coca-Cola with a donation of $1 million dollars to the Red Cross. On the ground, Coca-Cola is getting four thousands cases of water through to Haiti each day. Keep going Coke -- Please keep helping!
Governor Paterson should back off the soda. It is not the source of the obesity problem. Inferior physical and nutritional education, which of course leads to poor exercise habits and ill-advised diets, are the cause of inflated waistlines. Having a salad with a Coke is far better then a bottle of water to wash down a face full of dirty water dogs. Add walking up the stairs instead of taking the elevator and you’re golden.
Not only does the consumption of sugar drinks correlate with obesity, but strangely enough (or should I say, strange to me), so does the consumption of diet drinks. Perhaps heavy diet drink drinkers look for their sugar elsewhere.