New York Governor David Paterson on Thursday proposed lifting the sales tax on diet soda, while adding a new “sugar tax” to full-calorie drinks, in a fresh bid to boost revenue for the cash-strapped state.
The proposed tax would generate $815 million annually, a Paterson spokesman said.
Paterson’s original “soda tax” proposal, which would have raised $1 billion per year as the state struggles to close a $9.2 billion budget deficit, was rejected by the state legislature amid strong opposition by the beverage industry.
In the new version, diet sodas would become cheaper while the more unhealthy drinks would go up in price.
“The new proposal will discourage consumption of high-calorie beverages while simultaneously making lower-calorie beverages more affordable, which will help lead to major gains in public health,” said New York City Mayor Michael Bloomberg, who supported the original version.
Many health experts say non-diet soft drinks are a key source of excess calories in the U.S. diet and likely helping to fuel the obesity epidemic. Two-thirds of Americans, including one in three children, are overweight or obese.
But Nelson Eusebio, chairman of New Yorkers Against Unfair Taxes, said the plan was “bad for business and bad for consumers.”
“We don’t need another tax to fuel more government spending,” he said in a statement. “No matter how he tries to package it, imposing a new $1 billion tax on already stretched New Yorkers is simply a bad idea.”
Meanwhile, the Philadelphia city council rejected a soda tax of its own.
To offset revenue that would have been raised by the soda tax, the council instead approved a 9.9 percent increase in the city’s property tax, a doubling of commercial trash-collection fees, and a new fee on smokeless tobacco.