Gov proposes fee on sugary drinks

With more than half of Hawaii adults overweight and obesity-related medical costs exceeding $450 million a year, the Abercrombie administration wants state lawmakers to approve a fee on soda and other sugar-sweetened drinks to raise money to reduce obesity.

The administration will propose a fee of 1 cent per ounce — or $1.28 a gallon — on distributors that would be passed down to retailers and eventually to consumers. The cost of 12-ounce cans of soda could rise by 12 cents, for example, while the cost of 64-ounce drinks could increase by 64 cents, a painful levy meant to discourage consumption.

The state Department of Health estimates that the new fee would generate about $37 million a year and would be used mostly for childhood obesity prevention and oral health care programs, with some of the money directed to adult obesity and diabetes prevention.

"The rationale behind putting a fee on sugar-sweetened beverages is we want to create a disincentive," said Loretta Fuddy, director of the Department of Health. "And we know that cost is very much connected to our choice when we go into the market."

Gov. Neil Abercrombie called for a soda tax two years ago, but the proposal was quickly shot down by the state Legislature after howls of opposition from the beverage industry. Most of the money from the soda tax would have helped with the state’s budget deficit, however, with only a share linked to state programs to combat obesity.

Fuddy and others hope that an improved economy, and the fact that all of the money from the soda fee would go to fight obesity, might give the legislation a better chance this session.

"I think there is a growing recognition about the contribution of sugar-sweetened beverages to the problem of obesity," she said.

Coca-Cola, Pepsi and other beverage industry leaders have fought a soda tax in Hawaii, along with local companies such as Hawaiian Sun and Wai­alua Soda Works. No Hawaii Beverage Tax, a coalition of dozens of businesses, formed two years ago and remains actively involved in preventing new beverage taxes or fees.

The beverage industry and others argue that obesity is caused by a combination of food, drink and lifestyle choices, so imposing a tax on soda is discriminatory and unlikely to change behavior among children. Higher taxes and fees, businesses warn, could also cause job losses in the beverage industry and harm retailers still recovering from the recession.

Senate Minority Leader Sam Slom (R, Diamond Head-Kahala-Hawaii Kai), president of Smart Business Hawaii, a small-business advocacy group, said that businesses expected another soda tax proposal from the Abercrombie administration this session. "I think that the industry will be ready," he said.

A childhood obesity prevention task force recommended a fee on sugar-sweetened beverages in a December report to the Legislature. The task force, which included public and private health, education and social-service interests, also called for early child care wellness guidelines, standardized student fitness assessments at schools, lifting the general excise tax on fresh fruits and vegetables, nutrition standards for government agencies and a tax incentive for private companies that offer comprehensive wellness programs.

Lawmakers, and some of Abercrombie’s allies, privately acknowledge that passing a soda fee this session will be a challenge.

"I think it’s a critical issue. I’m going to take every issue seriously," said Sen. Josh Green (D, Naalehu-Kailua-Kona), an emergency room doctor and chairman of the Senate Health Committee, who heard Abercrombie’s soda tax bill two years ago. "I want to see the whole community come out and weigh in on it."

Rep. Della Au Belatti (D, Moiliili-Makiki-Tantalus), chairwoman of the House Health Committee, said her committee would also likely hear the legislation. She said she has not taken the temperature of other lawmakers to determine whether there is enough support. "I’m not predisposed one way or the other, but I think it’s important that we have the conversation," she said.