Lawmakers refocus on proposed tax on sugary drinks; measures targeting bottles, bags doubtful

A proposed tax on sugar-sweetened beverages may be seeing new life in Vermont, while prospects for new revenue from bottle deposits and a tax on grocery bags look dim.

Lawmakers have been focusing on those consumer products this week as they look for new ways to raise money and to discourage what some see as unhealthy habits. The process is far from over, with the bills still to be debated by the full House and then sent to the Senate.

Still alive, and perhaps gaining momentum as of Friday, was a 2-cents-per-ounce tax on sugar-sweetened beverages to be paid at wholesale. It was being heard by the House Ways and Means Committee after winning support in the Health Care Committee a day earlier.

The roughly $30 million the tax is projected to raise each year would go toward increasing Medicaid payments to doctors and other health providers, with the aim of taking pressure off the rates they charge to private insurers.

The House Natural Resources Committee, meanwhile, appeared to have killed a tax on plastic and paper grocery bags and a separate provision to have the state collect bottle deposits — which now go to beverage distributors — when consumers don't return their bottles. The so-called "unclaimed nickels" provision was expected to raise about $2 million a year.

The sugar-sweetened beverage tax could roughly double the price of a 2-liter bottle of soda, lawmakers said. In the Ways and Means Committee on Friday, they debated where to strike the balance between raising revenue and getting people to drink less of a class of products widely linked to obesity.

"According to one conservative estimate, Vermont spends and average of $202 million a year on obesity-related medical costs for adults alone," said Anthony Iarrapino, director of the Alliance for a Healthier Vermont, which supports the tax.

Kevin Dietly, representing the Vermont's beverage industry, testified earlier in the week that since the proposed tax would not be imposed directly at retail, its cost could be spread by the beverage industry across all of its products, or by grocers across a broader range of products.

"Beverage excise taxes are hidden taxes and as such may have no impact on consumer behavior beyond driving up the price of groceries generally," Dietly said, adding that the tax would be regressive, falling hardest on low- and moderate-income households.