Policy group says sugary drink tax could fizzle
While a proposed tax on sugary drinks could pour as much as $560 million into the state’s coffers every year and perhaps put a lid on obesity, it will no doubt be tough for beverage producers to swallow, a public policy group warned recently.
The Illinois Policy Institute is arguing against the proposed Sugar-Sweetened Beverage Tax Act, or Senate Bill 9, which would impose a 1-cent tax on every ounce of bottled sugar-sweetened beverage, syrup or powder sold to retailers.
It illustrated its case by pointing to the Excel Bottling Co. in Breese, Illinois.
Ski, Excel’s flagship product, is a lemon juice, orange juice and cane sugar soda sold in a green glass bottle that has become a beloved staple in Southern Illinois and St. Louis. The business is run by Bill Meier and has been in the family since 1936, when Edward “Lefty” Meier, Bill’s grandfather, bought the bottling plant with reward money from catching a bank robber.
Due to the demand for Ski and other craft sodas in the St. Louis area, Excel has been steadily growing and soon expects to expand with a new distribution center. Meier contends that the proposed sugar-sweetened beverage tax would “dramatically affect” his business, according to the Illinois Policy Institute’s article, with each 3 percent drop in soda sales leading to one employee being laid off. If the measure passes, he said, he would open the new distribution center in St. Louis, not Illinois.
The institute also cited the market reaction in Philadelphia to a 1.5 cents per ounce tax on sugar-sweetened drinks implemented at the beginning of the year. The tax has nearly doubled the price of many sugar-sweetened beverages and led to drops in their sales of up to 50 percent for some local businesses, the group said.
Large companies have also been affected, with Pepsi citing sales drops of approximately 40 percent in its recent decision to lay off between 80 and 100 distribution workers in Philadelphia. The institute quoted a Philadelphia Teamsters Union official who called the tax outrageous and criticized fellow unions for not supporting the fight against it.
The institute said if such losses hit large drink manufacturers like Pepsi in Illinois, the state’s pension systems could be devastated. They already are underfunded by $130 billion, and since some of the state’s investments are in soft drink companies, the state could be even more hard-pressed to pay.
Illinois owns more than $66 million worth of stocks and bonds in soft drink makers.
As far as the health aspects of the tax go, the institute argues that studies have not yet conclusively linked sugar-sweetened beverage taxes to a decrease in obesity. It also said these types of taxes hurt the poor and less-educated consumers most, with consumption of sugary sodas being most common among those making less than $30,000 a year.