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Beverage companies spend millions to stop soda tax

By Duane D. Stanford

Bloomberg News

LAST UPDATED: 05:41 a.m. HST, Mar 13, 2012

Last month, Hawaii lawmakers killed a proposed tax that would have added 17 cents to a single-serve bottle of soda. It was the second failed attempt, even though Governor Neil Abercrombie had pushed the proposed levy.

Like many advocates of a sugary beverage tax, Abercrombie faced a well-funded lobbying campaign from soda makers opposed to such efforts, which are designed to stem rising rates of obesity. Since the beginning of 2009, PepsiCo Inc., Coca-Cola Co. and the American Beverage Association have spent as much as $70 million on lobbying and issue ads, according to the Center for Science in the Public Interest, a proponent of soda taxes.

Efforts to enact such levies have foundered in 30 states.

“Whoever is loudest tends to control the discussion and, generally speaking, you buy your microphone with money,” said Judith Phillips, a research analyst for Mississippi State University who studied the issue for lawmakers.

Health advocates agree soft drinks are an unhealthy source of sugar in Americans’ diets. More than 35 percent of U.S. adults and about 17 percent of youths — or roughly 90 million people — are considered obese, according to the Centers for Disease Control and Prevention. Some say taxing soft drinks is one of the most effective ways to reverse the trend.

Following the presidential election, states and cities may restart a push on soda taxes. Philadelphia Mayor Michael Nutter hasn’t ruled out a third try for a tax on sugary beverages. In Baltimore, Mayor Stephanie Rawlings-Blake wants to more than double a 2-cent per container tax adopted in 2010 to 5 cents. Richmond, California, a San Francisco suburb, will put a soda tax referendum to voters later this year.

Money Grab

Opponents of soft-drink taxes say they’re little more than a money grab. Blaming obesity on sugary soft drinks misses the real cause of the problem — too many calories of any type going in, and not enough going out, they say. In a paper titled “Our Position on Obesity,” Coca-Cola cites 45 scientific studies, reviews, and reports to contradict claims that sugar-sweetened beverages are the primary cause of obesity.

Kent Landers, a Coca-Cola spokesman, declined to comment, as did Peter Land, a PepsiCo spokesman.

Obesity in the U.S. comes at a “staggering” financial cost, the CDC has said. Everything from treatments for diabetes to lost work by obese employees cost Americans about $147 billion in 2008, according to one estimate cited by the agency.

In 2009, President Barack Obama recommended exploring a federal tax on sugary drinks to help pay for health-care reform. The effect was like shaking a can of Coca-Cola and cracking the tab. Emboldened lawmakers in 30 states proposed levying their own soda taxes on the $74 billion U.S. soft drink industry.

Budget Gaps

The love affair with soda taxes wasn’t simply about improving citizens’ health; many states also aimed to close budget gaps.

If a soda tax makes sense anywhere, it makes sense in Mississippi, said Kelly Brownell, director of Yale University’s Rudd Center for Food Policy & Obesity in New Haven, Connecticut. The state has the highest obesity rates in the U.S. — 34 percent of Mississippi’s adult population is considered obese — and increasing numbers of children are heading in that direction.

“The fact that it got considered there at all is a testament to how powerful the idea is,” Brownell said. “A soft-drink tax is the only thing to address obesity that doesn’t cost money and in fact generates money that you can use for other important programs.”

In 2010, Mississippi state legislator John Mayo, a Democrat, filed a bill to levy a 2-cent per ounce excise tax on soft drinks. It would have added 24 cents to a 12-ounce can of pop, or $1.35 to a $1.47 2-liter bottle of Coca-Cola. The proposal included bottled tea and juices containing less than 100 percent fruit.

Long Odds

A legislator since 2000, Mayo had been around long enough to know the odds were long that his bill would pass, he said in an interview. He simply wanted a debate about whether sugary beverages were making Mississippians fat.

When a politician starts making noises about soda taxes, the state beverage association typically rolls into action. Found in every state and made up of local manufacturers and distributors, they work with the industry-funded ABA, creating a network that reaches from town hall to the U.S. Congress.

The soft drink companies are well represented at the state level, as well. Coca-Cola’s North American bottling operation, for example, has seven regional business units. Each has a public relations and government affairs team whose sole responsibility is to bore into local communities like moles.

Substantial Threat

Ron Aldridge, head lobbyist for the Mississippi Beverage Association, said Mayo’s bill didn’t stand a chance. Still, he was leaving nothing to chance.

“You take any threat as substantial in our world because you never know how the public might move,” Aldridge said in an interview. “You prepare for the worst.”

Aldridge, a lawyer and former state legislator in Jackson, Mississippi, is state director for the National Federation of Independent Business, which he asked to speak out against Mayo’s bill. His son was personal assistant to then Governor Haley Barbour, who announced he’d veto Mayo’s proposal days after it became public.

Meanwhile, Bill Brown, a Pepsi distributor, said Mayo’s bill could cost jobs in an already tenuous economy. Brown held meetings to “educate” his workers about the threat and urged them to call their local legislators in opposition. Flyers in employee’s paychecks framed the message: “This is our livelihood.”

Mayo’s bill died in committee.

The soft drink companies didn’t declare victory. Nor did they in the 30 states where similar bills also foundered.

That’s because they know a growing stigma against sugary drinks, fueled by findings that sugar can be addictive and triggers cancer, may shift public sentiment, said Bonnie Herzog, an analyst with Wells Fargo & Co.

“It’s an ongoing risk,” said Herzog, who is based in New York. “And over time that risk has increased.”

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localguy wrote:
For anyone who believes Neil would use his "Soda Tax" only for health related programs, never letting it be raided by bureaucrats, always running an open and honest program, I have some prime HI bottom land to sell you. As our bureaucrats have already proven with their lies on the ciggerette settlement money, they raided it to pay for their own special projects, basically the stop smoking program is only a shell of what it once was. Bureaucrats lied to our faces again, saying only to be used for stop smoking programs, then when they were challenged to actually work to balance our budget, they knew they could not do this, so they raided the fund to make up for their incompetence. Proof again anytime a bureaucrat says a new tax gives you choices, they are lying to you. Neil, take you soda tax and go home. We do not need another bureaucrat money pit of our tax money. It's what you and your cohorts do, waste taxpayer's money and lie to our face. Give us a break.
on March 13,2012 | 06:15AM
dhclinton wrote:
excellent points...if goofy muffi wasnt such a bully, neil would be tending to his mulch farm in maui.....most of the time in politics you vote for the lessor of the two evils..
on March 13,2012 | 06:44AM
Heart wrote:
Actually tobacco-related taxes have never been used for tobacco control programs in Hawaii. Only money from the tobacco settlement with the tobacco companies was earmarked for those programs. The tax dollars have always been used for other purposes such as EMS, the trauma fund, funding community health centers, etc.
on March 13,2012 | 07:12AM
localguy wrote:
Check a report by KITV 4 where our bureaucrats raided the tobacco settlement money, this was what I was talking about. The money is not being used as intended. Now used for filling budget holes caused by our bureaucrats failing to do their job and their special projects. They lied to us again, it's what they do.
on March 13,2012 | 09:53AM
palani wrote:
A 12 ounce serving of Coca Cola has 145 calories, while the same 12 ounces of either orange or apple juice has 165, and grape juice has 240! This national movement has nothing to do with health or obesity, it is simply an excuse for yet another backdoor tax increase.
on March 13,2012 | 06:21AM
Heart wrote:
The key difference is in the naturally-occuring sugara that are in 100% fruit drinks are processed differently by the body than are the artificially added sugars. Yes, too much of anything is not good for you, but this study points out that even small amounts of sugar-added drinks significantly increases the risk for heart disease.
on March 13,2012 | 07:15AM
TLehel wrote:
Sugar in fruit juice is sugar that is healthier for you. It's natural sugar called fructose and is much healthier for you than the sugar from cane.
on March 13,2012 | 10:19AM
edster48 wrote:
Just another attempt at a money grab, brought to you by the people that feel a budget is just an impedement to spending.
on March 13,2012 | 07:27AM
mcc wrote:
Why do all peoples bad habits need to be taxed? The legislature keeps legislating morality and bad habits in their quest for the almighty dollar so they can buy votes.
on March 13,2012 | 07:31AM
Heart wrote:
Taxes have been shown to be one of the most effective ways to reduce consumption, especially among the young, and in lower socio-economic groups. Those groups also happen to be the ones most disparitely affected by the health damage done by products like sugar-sweetened beverages and tobacco, and are also the ones most targeted by those industries. Using the revenue generated by a one-cent tax on sugar-sweetened beverages to combat obesity on a more comprehensive scale would result in millions in savings to the state in healthcare costs, and have many more positive secondary results such as improving kids performance in school (overweight and obesity are linked to lower scholastic performance). The tax would allow consumers to make choices when purchasing products, hopefully selecting healthier options. Beverage manufacturers already offer healthier options, so they could easily adjust to consumer demand. In the current marketplace, the healthier options, like 100% fruit drinks or water, are more expensive than the sugar-sweetened options because of federal government corn-syrup and sugar subsidies. The state tax on sugar-sweetened beverages would help to balance that inequity.
on March 13,2012 | 09:42AM
localguy wrote:
Is it just a coincidence this childhood obesity problem comes after education bureaucrats eliminated/reduced the majority of school physical activities and more time now spent on electronic games and watching TV? When kids like me grew up in the 60s we spent so much time outside playing we were not fat. Even drinking sodas didn't bother us thanks to all our physical activity. Bureauctats love to bragg about what ever new tax gives back to taxpayers, failing to say later on they will raid the funds. Easier to fix this problem by more physical activity and eating better. You can't fix all the world's problems through taxes.
on March 13,2012 | 09:57AM
TLehel wrote:
I couldn't agree more. If there was more time for physical activities rather than sitting around trying to meet "the standards" the kids would be much better off. From personal experience I can tell you that when you exercise enough it doesn't matter what you eat, especially at a young age. Additionally, exercise is PROVEN to to make you feel better-- releasing serotonin and endorphins and such. Even more, exercise stimulates brain activity. Kids don't need longer school days and more classes, they need more exercise. The DOE needs to learn this.
on March 13,2012 | 10:36AM
Kaleo744 wrote:
But yet, our government has no problem taxing cigarettes. Just goes to show you how well the lobbyists dollars are "influencing" our legislature. Soda & GMO lobbyists are faring well this legislative session, don't you think?
on March 13,2012 | 09:10AM
iwanaknow wrote:
People, people, people, there are alot of services and bills that government has to pay and this is just one more way to pry $ from your pockets..........deal with it people.......drink less sugary drinks. Buy more stock in water, beer and soda companies.
on March 13,2012 | 09:55AM
saywhatyouthink wrote:
What's Neil going to propose next? perhaps a fast food tax or candy tax on top of regular state excise taxes? To blame soda for a high rate of obesity is just BS when there are soooo many contributing factors to this problem. If you need to balance the budget, do so by down sizing government and cutting the waste we all know is still going on. The DOE is a prime example.
on March 13,2012 | 02:23PM
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