About SSB Taxes

About A Penny an Ounce Excise Tax on Sugar Sweetened Beverages

There are two potential types of sugar sweetened beverage taxes: sales taxes and excise taxes. Each of these types of taxes have advantages and disadvantages. An excise tax is likely to be the most effective way to decrease consumption and alter consumer behavior.

An excise tax is defined as “a tax levied as a fixed amount per unit of measurement (e.g., ounce or gallon) on the producer of certain goods.” The tax is then built into the price a consumer pays for the item. The advantages of using an excise tax as an SSB tax are:

  • An excise tax may have a greater effect on alerting consumer behavior because the tax is built into the purchase price of the item which is what the consumer sees as he or she makes the decision to purchase the item.
  • Excise taxes may offer a disincentive for consumers to buy larger volume containers of SSBs because the tax per ounce increases as the volume increases.

The disadvantages of a sales tax include:

  • Consumer behavior is less likely to be altered by a sales tax because the tax is levied at the point of sale and not apparent to the consumer when he or she makes the decision to purchase an SSB.
  • Sales taxes may offer an incentive for consumers to buy larger volume containers of SSBs because the tax per ounce decreases as the volume increases.
  • Sales taxes may also offer an incentive for consumers to purchase less expensive brands with the same caloric content instead of choosing not to purchase an SSB at all.

Why a Penny an Ounce?

In short, this is the amount research shows is needed to cut consumption enough to have an effect on obesity.

The March 2010 issue of Health Affairs magazine stated that a penny an ounce tax on sugar-sweetened beverages is likely to be the single most effective measure against the childhood obesity epidemic. Through a review of 160 studies, they found that a 10% increase in sugar sweetened beverage prices would reduce consumption by approximately 8%.

What Programs Could the Revenue from a Sugar Sweetened Beverage Excise Tax Support?

Reducing Catamount Health and VHAP’s Waiting Period from 12 to 6 months. Currently, anyone who has private health insurance or whose employer stops offering them insurance has to wait a year before applying for Catamount Health and VHAP. This leaves many working people trapped in high deductible plans.

Adding a dental benefit to Dr Dynasaur for pregnant and nursing mothers. Dental professionals believe that this will greatly improve the oral health of both mothers and their children.

Lowering Catamount Health out of pocket costs back to more affordable 2007 levels. Catamount Health premiums have increased between 22%-54% since 2007 while its deductible has doubled to $500 and its annual out of pocket limit increased from $800 to $1050. High premium and deductibles are the number one reason people either drop out of Catamount Health or choose to remain uninsured even though they are eligible.

Increasing the availability in schools of the Tooth Tutor program which helps Vermont schoolchildren access affordable dental care

Eliminating the estimated $7.9 million deficit in the Catamount Health Fund. This would potentially prevent the need for premium, deductible and co-pay increases for Catamount Health enrollees.
Making school lunch free for 7,500 low-income children. Schools report that reduced-price eligible children often do not have the 40 cents needed to pay for lunch.

Creating the Vermont Food Assistance Program, a program proposed by the Vermont Food Bank to allow them to purchase and distribute healthy food that is not donated. 80% of the people served through the Vermont Food Bank network earn under 200% of the Federal Poverty Level (roughly $3,692 gross household income per month or less for a family of four)

Funding an anti-SSB/anti-obesity public education media campaign

Eliminating Medicaid’s existing five year waiting period for legally residing non resident pregnant woman and children