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Senate Finance Discusses Taxing Sodas

While tax bills must officially begin in the House, one senator hopes his bill will start
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While tax bills must officially originate in the House, the Senate Finance committee heard a bill by state Sen. Eddie Lucio aimed at starting “an intelligent conversation” about a tax on sodas.

Senate Bill 1004 proposes a penny-per-ounce tax on artificially sweetened beverages, a move that Lucio says addresses two problems—the state’s need for additional revenue to fill its budget hole, and skyrocketing adult and childhood obesity rates.

“I’ve listened to many hours of testimony about the effects that cuts would have on some of the most vulnerable,” he said. “No one is elected to raise taxes…but I’ve become convinced that we can’t cut our way through the financial hole we’ve found ourselves in. We’ve got to have the political courage to realize that new revenue is needed.”

Lucio told committee members that the state could raise anywhere from $1 billion to $2 billion each biennium from the soda tax. Also, consumption of sugary and high-calorie sodas would decline, helping to curb obesity rates. (According to the state comptroller, Texas diabetes and obesity rates are expected to quadruple by 2040 and will cost the state billions in related healthcare costs).

“This bill is simply an option,” Lucio said. “We can be courageous like Texans in the past…or we can cut our way through a budget deficit and hurt Texas businesses and families. That’s our choice, members, cuts or courage.”

Testimony in the committee hearing ran the gamut this morning. Advocates Celia Cole with the Center for Public Policy Priorities and Lauren Dimitry with Texans Care for Children testified in favor of the bill, arguing that it supports a balanced approach to fixing the budget deficit and helps address a major public health problem. Dimitry said Texas children consume three or more sodas a day, which is equivalent to two pounds of sugar per week. Obese children are at higher risk for diabetes, chronic hypertension and heart disease.

“If we don’t reduce the sugar intake, we won’t solve the obesity problem,” she said.

Opponents, however, argued that simply imposing a tax wouldn’t change someone’s behavior. “We do not feel that these new taxes will empower families to seek healthier lifestyles,” said Guadalupe Morin with the Hispanic Women’s Network. “We’re already paying sales tax (on sodas), why do we need another tax?”

Opponents of the bill also contended that the soda tax would be regressive—it would disproportionately affect low-income Texans. Others argued that it’s not government’s responsibility to change children’s consumption habits, but their parents’.

“You’re the parents, don’t buy (the soda),” state Sen. Jane Nelson, R-Flower Mound, said. “I don’t know that you can raise a tax high enough to curtail the consumption of things that are unhealthy for our children.”

There’s also somewhat of a paradox that comes with a soda tax. Lucio said his intention is to raise money and limit consumption of sugary drinks. However, if Texans respond to the tax and end up drinking less soda, the state will therefore see less revenue. Still, Dr. Steven Pont, director of the Texas Center for the Prevention and Treatment of Childhood Obesity at Dell Children’s Center, said Lucio’s bill is a needed step in combatting adolescent and adult obesity.

“I by no means think that this will solve the obesity epidemic,” he said. But “doing nothing is the most costly mistake that our state can make.”

Despite those arguments, there’s little the Senate can do. The Texas Constitution requires that tax bills originate in the House. For the soda tax to become reality, House members must get behind it.