Imposing new excise taxAn excise tax is a tax imposed on a specific good or activity. Excise taxes are commonly levied on cigarettes, alcoholic beverages, soda, gasoline, insurance premiums, amusement activities, and betting, and typically make up a relatively small and volatile portion of state and local and, to a lesser extent, federal tax collections. es on food and beverage seems to be a trend now in state and local taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. ation. Those areas with some of the worst business tax climates and/or highest tax burdens seem to be jumping first:
- California Democratic Senate Majority Leader Dean Florez has introduced a bill to impose a 1-cent-per-teaspoon-of-sugar tax on commercial beverage sales.
- D.C. City Council member Mary Cheh has proposed a 1-cent per ounce soda tax to fund a new program she’s sponsoring to require healthier food at public schools. After opposition from at least one of her colleagues on the soda taxA soda tax is an excise tax on sugary drinks. Most soda taxes apply a flat rate per ounce of a sugar-sweetened beverage. , Cheh has indicated she may now pursue expanding the city’s sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. to soda, emulating Maryland and Virginia. That would raise $6.5 million per year as opposed to $9 million from the special tax.
- Philadelphia has a 2-cent-per-ounce soda tax proposal.
- Washington State has a new candy and bottled water tax going into effect on June 1, followed by a 2-cent-per-can soda tax taking effect July 1. Wholesalers are considering going to the ballot to repeal.
An interesting note: the D.C. proposal and probably others base the tax on the amount of beverage a concentrated powder would produce. So a 19-ounce canister of lemonade powder, for instance, would face a tax of $2.56 based on the D.C. formula.
More on food and beverage taxes here.
Share