Should soda be a sin under NH tax code?

By Grant Bosse on August 6, 2012
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FOR THE MONITOR

Maybe it’s the British accent, but Catherine Mulholland fits the part of New Hampshire’s Nanny. The former state representative from Grafton is hoping to rejoin the House this fall, and she wants to use the tax code to make us healthier.

Mulholland supports a 2 percent tax on sugary soda, along with an 80-cent per gallon tax on soft drink syrups, in order to reduce consumption of unhealthy beverages and raise money to fight obesity.

During her six years in the New Hampshire House, Mulholland pushed to expand the state’s sin taxes to candy and soda pop. In 2007, she introduced a tax on candy, which the House quickly killed. In 2010, she narrowed her focus to soft drinks. That proposal also went flat, failing in the House by a vote of 288-65.

But Mulholland isn’t deterred by those setbacks, or her own defeat in 2010. She’s running this year for the floterial district representing Grafton and five other towns, and pledges to bring back the soda tax. She sees it as a natural extension of New Hampshire’s reliance on “sin taxes.”

“To be addicted to sugar is just as bad as being addicted to alcohol or tobacco,” Mulholland argues.

And she’s not put off by critics who think she’s trying to turn the Granite State into a Nanny State.

“I’ve been called a Socialist and a Marxist, and requested to go back where I came from,” Mulholland recalls.

Where she came from is London. She first came to the United States in 1966, and started vacationing in Grafton in 1973. She’s lived there permanently since 1987.

Proceeds from Mulholland’s proposed soda tax would have gone to a newly created Obesity Treatment and Prevention Fund with the state Department of Health and Human Services.

She’s sympathetic to New York Mayor Michael Bloomberg’s attempt to ban servings of soda larger than 16 ounces, but wouldn’t forbid people from ordering extra-large cups.

“That’s a great idea, but tax it. Don’t restrict the size,” Mulholland says.

According to the Tax Foundation, 17 states include sodas under their general sales taxes while exempting other groceries. Alabama, Tennessee, Virginia and West Virginia have excise taxes specifically on soda. These states do not exempt diet sodas, as Mulholland did in her bill.

Soda’s role as a dietary villain may be overblown. Even the research cited by advocates of soda taxes shows little impact on soda consumption. In fact, children who drank less sugary soda replaced the calories with even more milk and juice. That certainly sounds healthier, but wouldn’t do anything to lower childhood obesity. The kids were taking in more calories than before.

There’s little in the record to indicate that drinking soda is unhealthy. There’s a lot of evidence that unhealthy people drink a lot of soda. But that’s changing, as national soft drink consumption has fallen over the past decade. We’re drinking less soda and more water, and it wasn’t the tax code that changed our behavior.

That should be good news for Mulholland, who sees too much Coke and Pepsi as contributing to our nation’s health problems.

“Large quantities aren’t good for anyone, whether it’s diet or sweetened with high fructose corn syrup,” Mulholland says.

Perhaps. But is the House Ways and Means Committee the place to get us to make better decisions? Mulholland sees her bill as a way to not only change our behavior, but raise the revenue needed to address the consequences of that behavior.

She has so far found little support, even among her fellow Democrats. Before a 2 percent tax on soda could go into effect, lawmakers would have to decide which beverages should be taxed and which would be exempt. The Tax Foundation calls this the Frappaccino Test.

California’s sales tax doesn’t apply to coffee beverages. Three states exempt anything made with milk. Virginia taxes only carbonated beverages. Bottled coffee drinks can have as much or more sugar as a Coke. Are they taxable? What about flavored water? Gatorade?

Mulholland doesn’t shy away from making such decisions. And she doesn’t mind when people says she’s acting like New Hampshire’s nutritional nanny, telling us what we should eat and drink. What’s next? Taxing high-fat foods?

Mulholland contemplates this in her lilting London accent. “Maybe that wouldn’t be such a bad idea.”

Grant Bosse is Vice President for Media for the Josiah Bartlett Center for Public Policy, a free market think tank based in Concord.

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