OPINION: Levy on soft drinks likely target for Mississippi ‘sin’ taxes

Even leading Democrats in the Mississippi Legislature like state Rep. Cecil Brown, D-Jackson, take a look at the current stagnant economy and admit that there’s “no stomach” at the Capitol for any general tax increases in 2010.
But with the state’s revenue situation in dire circumstances and deep state budget cuts already anticipated, it’s likely that some fee increases may well come down the pike and it’s also likely that some new “sin” taxes could be explored.
The most likely target for any new “sin” taxes in Mississippi will be the lowly soft drink. ‘Sodas’ are what Yankees call ‘Cokes’ – which is what Southerners call any generic soft drink canned or bottled regardless of brand.
After months of talking about raising federal taxes on sodas as part of the federal public health reform bills trickling their way through Congress, the Senate Finance Committee version of the health reform bill contained no new taxes on sodas or other sweetened beverages.
The House version of health reform also doesn’t contain a soda tax. And the White House said last month that President Barack Obama is not going to ask for Congress to put a soda tax in the final legislation.
Taxes on soda aren’t new to lawmakers at the state level – 33 states charge sales tax on soft drinks. But generally they are fairly small, with the average soda tax rate being 5.2 percent. On a 12-ounce can of soda that costs $1, that translates to about 5 cents.
Proponents of taxes on sugar-sweetened drinks say taxing soft drinks is a public health strategy because it taxes products they claim contributes mightily to obesity, Type II diabetes and other ailments. Mississippi leads national indices for both obesity and diabetes.
With Mississippi struggling to meet the state match costs of a Medicaid program that’s likely to expand if Congress adopts one version or another of the Obama health care reforms, taxes targeted at obesity and diabetes could well gain some political momentum at the state level.
Soda taxes, or taxes on other sugar-sweetened beverages as well, also carry a strong incentive for lawmakers struggling for additional revenues.
During the Senate Finance Committee’s debate of a federal soda tax, the Congressional Budget Office estimated that adding a tax of three cents per 12-ounce serving to these types of sweetened drinks would generate $24 billion over the next four years.
What about in Mississippi?
The Rudd Center for Food Policy and Obesity at Yale University estimates that a half-cent per ounce tax on sugar-sweetened beverages (6 cents on a 12-ounce can) would produce $82.16 million annually in Mississippi based on our current annual consumption of 128.3 million gallons.
Arkansas currently taxes sodas and has since 1992. The Arkansas soda tax is about 2 cents per 12 ounces of soda. The fiscal year that ended on June 30 netted $47.6 million in revenue from the tax.
The Arkansas tax is paid by distributors, manufacturers, and wholesalers that sell soft drinks to retailers in the state; and retailers that purchase soft drinks from unlicensed distributors, manufacturers and wholesalers. The tax is embedded in the purchase price that consumers pay.
Why wasn’t a soda tax in the federal health reform legislation? Coke, Pepsi and Kraft Foods have good lobbyists in Washington. That’s why a soda tax will be a tough sell here, too.

Contact syndicated columnist Sid Salter at (601) 961-7084 or e-mail ssalter@clarionledger.com.

Sid Salter