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Could a tax on sugary drinks help Americans avoid the fiscal cliff?

Published: Friday, Nov. 30 2012 5:20 p.m. MST

This Thursday, May 31, 2012 file photo shows a display of various size soft drink cups next to stacks of sugar cubes at a news conference at New York's City Hall.

Associated Press

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Some believe lawmakers should consider taxing sugary drinks to help avoid falling off the so-called fiscal cliff. The nonprofit Center for Science in the Public Interest said a penny-an-ounce tax would yield $160 billion over 10 years.

"Soda and sugary drinks are fueling an epidemic of costly diseases, and the fact that these drinks are dirt cheap is part of the problem," said CSPI executive director Michael F. Jacobson in a written statement. "A truly balanced approach to deficit reduction should not leave this easy money on the table."

The group also targeted increased taxes on alcoholic beverages for an additional $14 billion a year. It said those taxes have not increased in more than 20 years. To make his case, Jacobson wrote to members of the Senate Finance Committee and the House Ways and Means Committee, as well as budget committees for both the House and Senate. He noted that more than 30 states have placed excise or sales taxes on sugar-sweetened drinks to boost funds.

It's a controversial, but not new, idea. It has also been supported by the Economic Policy Institute and the Bipartisan Policy Center. Former Secretary of Treasury Lawrence Summer told tax economists, "Mark my words, this one will come," according to a story in the Washington Post.

The Peterson Foundation wanted to expand ideas to reduce the deficit over time and recently hired five think tanks to come up with plans. The groups include the Center for American Progress and the Economic Policy Institute on the more liberal side, the conservative American Action Forum and the Heritage Foundation, and the more neutral Bipartisan Policy Center. Of those, BPC and EPI want taxes on sweetened drinks, according to the Post's Wonkblog.

Some state legislatures have already adopted some form of sugar tax, while others are considering it. For instance, WCAX said the Vermont Legislature will consider the issue early next year. It won't be the first time that body has considered a tax on sweetened drinks, but it may have a more realistic chance of passing this time around, the station said.

Mother Jones reported last June that efforts to restrict the size of sugary drinks in New York City had met a lot of vocal opposition, while a tax on them would be better received.

"Another option may provide hope to those who see obesity as a national disaster, but who think regulating sizes of sugary drinks sold will either prove ineffective or backfire. The idea of a 'soda tax' — a tax per beverage or per ounce of drinks with added sugar — isn't new, and in 2009, 33 states levied taxes on sodas at an average rate of 5.2 percent," the article said.

It's a discussion taking place against a shifting backdrop. Some who have taken the step of tacking on so-called "sin" taxes for things deemed not healthy, like the "butter" tax in Denmark, are backing off. Earlier this month, Denmark's tax ministry announced it would drop its fat tax because it only increased costs for manufacturers and Danes were crossing borders to get their unhealthy snacks.

"The fat tax and the extension of the chocolate tax, the so-called sugar tax, has been criticized for increasing prices for consumers, increasing companies' administrative costs and putting Danish jobs at risk," it said in a statement quoted by Aljazeera.com. The ministry said it would cancel plans to add a sugar tax.

"It’s an interesting development at a time when the United States and other countries are attempting to steer consumers to healthier choices with their own counter-obesity policies," wrote the Post's Olga Khazan. She noted that Hungary instituted a tax on fatty foods and higher tariffs on alcohol and soda to help with health care costs, while France was looking at a tax on foods with palm oil.

EMAIL: lois@desnews.com, Twitter: Loisco

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