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New tax would hit sellers of sugary drinks

Marketplace Contributor Aug 17, 2012
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New tax would hit sellers of sugary drinks

Marketplace Contributor Aug 17, 2012
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Jeff Horwich: Two communities in California are contemplating a new tactic in the fight against obesity. Richmond and El Monte are looking at a new tax on stores and restaurants based on how many ounces of sugary drinks they sell. These businesses, most expect, would pass that cost on to consumers. Call it the “Battle of the Big Gulp.”

Here’s KQED’s Mina Kim.


Mina Kim: If voters approve Richmond’s penny-per-ounce tax this fall, expect that 20-ounce soda that costs, for example, $1 to go up to $1.20. Would that stop you from buying it? I posed that question to Raymond Landry, who had just bought an Arizona Iced Tea from a Richmond convenient store.

Raymond Landry: I’m going to drink sugar-sweet beverages. My children will drink sugar-sweet beverages.

But Lisa Powell, a senior researcher in health policy at the University of Illinois, says there is link between higher taxes and less consumption.

Lisa Powell: Generally, approximately a 10 percent increase in price would reduce consumption of sugar-sweetened beverages by about 12 percent.

Now, whether or not that translates into curbing obesity Powell says, depends on what people substitute for that soda. If it’s water, they’ll probably lose weight. A chocolate donut? Not so much.

In Richmond, I’m Mina Kim for Marketplace.

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