Texas Legislature Looks to Soda Tax to Fill Budget Gap

March 17, 2011

With a $27 billion budget shortfall, Texas is looking to raise taxes soda, diet soda, and energy drinks as a means to raise $2 billion a year and curtail the obesity rate.

The first issue with this proposal is the fact that there is still a $25 billion budget gap left to tackle. Second, targeting particular goods such as soda or energy drinks complicates the tax code. Third, why is one sugary product worth being taxed at a higher rate than another? According to Maureen Storey, Senior Vice President for Science Policy at the American Beverage Association, “Taxes do not make people healthier, making smart education decisions about diet and exercise do.”

Peremptorily imposing an ambiguous tax on a select group of consumers is the worst way to close a budget gap. In light of sound policy and a little bit of common sense Texas needs to seriously reassess their budget and focus on cutting the least-valued government spending or raising a broad-based tax such as the sales tax.

Check this Tax Foundation Fiscal Fact out for more on soda taxes.

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