A popular, yet controversial tax on sugary drinks, or a “soda tax,” was debated at the Finance, Revenue and Bonding Committee’s public hearing on Monday, March 16.
The proposed bill, HB 5537, would require “each distributor [to] pay a tax on sweetened beverages, syrups and powders sold to a retailer for sale in the state of (A) two cents per fluid ounce of sweetened beverages, and (B) for syrups and powers intended for commercial or institutional use, two cents per fluid ounce of sweetened beverages that can be produced from each container of syrup or powder.”
The revenue derived from this tax would fund a program to give free school meals to every public school student in Connecticut.
An unhealthy diet is one of the highest risk-factors for chronic illnesses and premature deaths. Every year, around 124,000 people in the U.S. die from “preventable deaths” because of reasons related to “ultra-processed foods.”
A study sponsored by the American Heart Association found that around 80% of Connecticut residents supported a sugary beverage tax to fund universal free school meals.
A similar bill was proposed last year. Over time, that bill evolved from implementing a two-cent tax on sugary drinks to creating a working group to study how to fund free school meals for all Connecticut students. That bill died in the chamber.
And, in 2019, Gov. Ned Lamont proposed a 1.5-cent tax on sweetened drinks to fund school lunches. When that bill was proposed, his office estimated that it would bring in an additional $160 million in tax revenue. The state would need between $90 and $110 million to fund universal school lunches.
However, this estimate does not consider changes in consumer behavior.
A 2024 study that looked at five major cities across the U.S., including Philadelphia, San Francisco, and Seattle, found that the sale of sugary and sweetened beverages fell by 33% after sugar taxes between one and two cents per ounce were implemented.
“A tax like this could cost sales decline of up to 20% in those categories as consumers either buy less or shop across state lines, which is exactly what happened in Philadelphia,” Jordan Coe, the president and co-owner of Waverly Markets, said. “And when they cross state lines with their beverage purchases, they take their whole basket with them.”
The Legislative Director for Teamster Union New England Joint Council 10 said similar policies led to the reduction of work hours and job losses among union members in other states. And Scott Dolch, the CEO of the Connecticut Restaurant and Hospitality Association, predicted that a tax on sweetened drinks would harm the already-suffering hospitality industry.
And it would impact more than just soda.
A popular, yet controversial tax on sugary drinks was debated at the Finance Committee’s public hearing on Monday, March 16.
The proposed bill, HB 5537, would require “each distributor [to] [yay a tax on sweetened beverages, syrups and powders sold to a retailer for sale in the state of (A) two cents per fluid ounce of sweetened beverages, and (B) for syrups and powers intended for commercial or institutional use, two cents per fluid ounce of sweetened beverages that can be produced from each container of syrup or powder.”
The revenue derived from this tax would fund a program to give free school meals to every public school student in Connecticut.
A study sponsored by the American Heart Association found that around 80% of Connecticut residents supported a sugary beverage tax to fund universal free school meals.
Unhealthy diets are one of the highest risk-factors for chronic illnesses and premature deaths. Every year, around 124,000 people in the U.S. die from “preventable deaths” because of reasons related to “ultra-processed foods.”
A similar bill was proposed last year. Over time, that bill evolved from implementing a two-cent tax on sugary drinks to creating a working group to study how to fund free school meals for all Connecticut students. That bill died in the chamber.
And, in 2019, Gov. Ned Lamont proposed a 1.5-cent tax on sweetened drinks to fund school lunches. When that bill was proposed, his office estimated that it would bring in an additional $160 million in tax revenue. The state would need between $90 and $110 million to fund universal school lunches.
However, this estimate does not consider changes in consumer behavior.
A 2024 study that looked at five major cities across the U.S., including Philadelphia, San Francisco, and Seattle, found that the sale of sugary and sweetened beverages fell by 33% after sugar taxes between one and two cents per ounce were implemented.
“A tax like this could cost sales decline of up to 20% in those categories as consumers either buy less or shop across state lines, which is exactly what happened in Philadelphia,” Jordan Coe, the president and co-owner of Waverly Markets, said. “And when they cross state lines with their beverage purchases, they take their whole basket with them.”
The Legislative Director for Teamster Union New England Joint Council 10 said similar policies led to the reduction of work hours and job losses among union members in other states. And Scott Dolch, the CEO of the Connecticut Restaurant and Hospitality Association, predicted that a tax on sweetened drinks would harm restaurant owners in the state.
“I also think that trying to do bans and trying to tax might not be the solution we want for a healthy environment. We want people to choose; it is a choice,” Dolch said at the hearing. He went on to say, “There are other ways to find revenue, I don’t think adding new taxes to this industry should be one of them.”
There are exemptions in HB 5537 for 100% fruit juice and drinks packaged for personal use. But, as it is currently written, it would impact many alcoholic beverages, including cocktails and malt drinks, which includes almost all beers.
“Unlike other beverages, the alcoholic beverage industry is heavily regulated and heavily taxed. We pay taxes that no other product pays: federal excise tax, state excise tax, state sales tax. That is not the case with soft drinks and other sweetened beverages. We have entire sections of our general statutes that are dedicated to the regulation and taxation of alcoholic beverages,” Larry Cafero, the executive director of Wine and Spirits Wholesalers of Connecticut, said. “I believe this tax, which would be imposed at the distributor level and certainly passed on to the retail level, will become a cocktail tax.”
This “unnecessary” tax would hurt family-owned businesses, packaging stores and other businesses that are suffering because of a decrease in alcohol consumption, Cafero said.
But Rep. Moira Rader (D-Guilford) doesn’t think this is necessarily a bad thing.
“This is one of the things that’s kind of been proven to have a really positive double-edged sword, where you reduce the consumption of the very beverages that really cause a lot of public health issues, and you also really support public education and the kids in those buildings, and their food insecurity and the food insecurity of their families,” she said. “It has this very large ripple effect.”
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