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Proposed U.S. Budget Plans Put Beverage Tax Back on Table

Nov 19, 2010

Two competing budget plans released earlier this week aim to reduce the country's ballooning budget deficit. One of the plans proposes a one-cent per ounce tax on all beverages sweetened with sugar or high fructose corn syrup, including flavored milks. IDFA continues to oppose all efforts to tax flavored milks or any other dairy products.

The Bipartisan Policy Center, a 19-member task force chaired by former Federal Reserve Chairman Alice Rivlin and former Republican Senator Pete Domenici, released its long-term plan to get the nation's economy in order and bring the federal budget into balance. It is similar to another draft proposal released this week by former Republican Senator Alan Simpson and Democrat Erskine Bowles, who were appointed by President Obama to lead the commission charged with making recommendations on the budget before the end of the year. The plans take aim at the country's budget deficits, which over the past few years have propelled the United States debt to more than $14 trillion.

The Bipartisan Policy Center plan, unlike the Simpson-Bowles draft, proposes a federal excise tax on the manufacture or importation of beverages sweetened with sugar or high fructose corn syrup. The tax would raise approximately $260 billion between 2012 and 2025. The plan asserts that the excise tax would reduce a significant but unspecified amount of federal spending on health care by reducing health problems associated with obesity, such as heart diseases, diabetes, strokes and cancer. The tax would be one cent per ounce, indexed to inflation after 2018, on sweetened beverages, including flavored milks.

"The recent elections sent a message that Congress needs to get our financial house in order," said Jerry Slominski, IDFA senior vice president of legislative affairs and economic policy. "Both of these serious blueprints prove that doing so is going to be extremely difficult with both spending cuts and tax increases on the table."

Imposing an excise tax on sweetened beverages was briefly considered, but ultimately rejected, as a possible way to help pay for the recently passed health care reform bill. Several states also have considered such taxes. IDFA opposes efforts to tax flavored milks and other dairy products and has worked to defeat the previous federal and state proposals.

Read a comparison of the two proposals here.

For more information, contact Slominski at jslominski@idfa.org.

 

 
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