In a "description of policy options" report entitled Financing Comprehensive Health Care Reform: Proposed Health System Savings & Revenue Options, under "lifestyle-related revenue raisers," for sugar-sweetened drinks, "the proposal would impose a federal excise tax per 12 ounces of sugar-sweetened beverage. Sugar-sweetened beverages under the proposal would include a variety of carbonated and uncarbonated beverages, such as nondiet soft drinks, fruit and vegetable drinks, functional drinks such as energy and sports drinks, iced teas and iced coffees and flavored milk and dairy drinks. The tax would apply to beverages sweetened with sugar, high-fructose corn syrup or other similar sweeteners. The tax would not apply to beverages sweetened with noncaloric sweeteners. Sugar-sweetened fountain-drink syrup would be taxed at a higher rate per ounce, such that the rate per ounce of fountain drink would be roughly equivalent to the tax rate on ready-to-drink soft drinks."
Also, for distilled spirits, wine, and beer produced in, or imported into, the United States, the report proposes "imposing a uniform tax based on the alcohol content contained in the product. The excise tax under the proposal is imposed at a rate of $16 per proof gallon on all alcoholic beverages. As under present law, domestic wineries having aggregate annual production not exceeding 250,000 gallons would be entitled to a tax credit on the first 100,000 gallons of wine (other than champagne and other sparkling wines) removed in a calendar year. In a manner similar to present law, for domestic brewers producing less than two million barrels of beer during the calendar year, the proposal imposes a reduced rate of tax on the first 60,000 barrels of beer removed each year."
(Click here to view the full report.)
Advocacy groups, such as the Center for Science in the Public Interest, are pushing the idea.
A tax of 3 cents per 12-oz. drink would raise about $50 billion over 10 years, according to the Associated Press, citing congressional estimates. Diet drinks, however, would not be taxed.
The idea behind the proposed increases is to tax lifestyle choices that contribute to rising medical costs. Obesity puts people at risk for diabetes and heart problems. Alcohol abuse is a risk factor in several types of cancer, liver disease and psychological problems.
The soft-drink industry and beer and wine producers are already lobbying to stop the proposals before they gain traction. The tax increases would lead to job losses for workers and higher costs for recession weary consumers, say the industries. Wine makers are also pointing to studies that suggest a glass a day can be good for health.
Under the proposal lawmakers are considering, beer taxes would be increased by 48 cents a six-pack, from the current 33 cents. Beer is still the favorite choice of Americans who drink alcohol.
Wine taxes would rise by 49 cents per bottle, from the current 21 cents. And the tax on hard liquor would increase by 40 cents per fifth, from the current $2.14. Percentage-wise, wine drinkers would take the biggest hit, a 233% tax increase per bottle. Hard liquor would see the smallest proportional increase, 19% per fifth.
The beer tax would rise by 145% per six-pack.
Proponents of the idea say it would equalize the tax treatment of alcoholic drinks, by charging the same tax rate based on alcohol content to all. But that would put an end to the current tax advantage enjoyed by beer and wine.
The higher alcohol taxes would bring in nearly $60 billion over 10 years.
"It's an over-reach when government uses the tax code to tell [people] what to eat and drink," Kevin Keane, senior vice president of the American Beverage Association, told The Atlanta Journal-Constitution concerning the proposals.
The ranking member of the Senate Finance Committee, Sen. Chuck Grassley (R-Iowa; pictured, right), deemed a soda tax a non-starter before it even bubbles up for discussion. "I think, quite frankly, the only reason it's being brought up is to get shot down early so it doesn't become part of the debate," Grassley told reporters. "I don't think it's going to have any legs at all."
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