News In Brief

In New York, more taxes may be coming to close budget gap

Daryl Paranada Jun 24, 2010

New York Governor David Paterson has set a June 28 deadline for lawmakers to reach an agreement on a state budget covering the year that began April 1. Because lawmakers failed to pass a budget for the fiscal year, they have been passing weekly spending bills to keep New York operating.

State budget negotiations have stalled over issues like the governor’s proposal to overhaul the New York’s public university system. One of the controversial aspects of the governor’s budget plan: a penny-per-ounce tax on sugary beverages, which would raise an estimated $815 million a year.

A Wall Street Journal survey of 684 New Yorkers found that 63 percent opposed the tax, 31 percent favored it, and 6 percent were unsure. Fifty-two percent of New Yorkers who said they never drink soda were also opposed to the tax. But a study commissioned by the New York City Health Department finds the tax could curb soda consumption and prevent cases of adult obesity, which might save New York an estimated $2.1 billion in medical spending.

From the Wall Street Journal:

The study, conducted by Dr. Claire Wang, a professor of health policy and management at Columbia University, analyzed various surveys on sugary drink consumption, related health risks and the effects of price on consumer choices. The findings: a soda tax would reduce consumption of sugary beverages by 15% to 20%. It would also prevent an estimated 37,000 or more cases of Type 2 diabetes and an estimated 145,000 or more cases of adult obesity over the next decade.

The proposed soda tax remains one of the remaining deals to hash out in Albany as lawmakers look fill the state’s $9.2 billion budget gap — something the governor has said he wants finished by [June 28]. Aside from taxing soda and other sugar-sweetened beverages, the measure would do away with state and local sales tax on bottled water, diet soda and other drinks with ten or fewer calories per 8 ounces. The Paterson administration estimates that the measure would raise $815 million a year.

Even if the sugary beverage tax doesn’t make it in the budget, a sales tax on clothing purchases of less than $110 might be part of the final budget. As well as a bigger cigarette tax that might make increase the cost of cigarette packs in NYC to $11.

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