Revised Sugary Beverage Tax Is Even Better For New Yorkers' Waistlines and Wallets, Health Commissioner Says

ALBANY, N.Y. (May 21, 2010) – State Health Commissioner Richard F. Daines, M.D., today praised Governor Paterson's proposed revision to the sugar-sweetened beverage tax to exempt low-calorie beverages and bottled water from state and local sales taxes.

"The Governor's proposal makes an even more dramatic price differential between high-calorie sugary drinks, which are contributing significantly to the obesity crisis nationwide, and low-calorie options," Commissioner Daines said. "The better choice for your health will be the better choice for your pocketbook as well."

Governor David A. Paterson had proposed in January that the state impose a tax of a penny an ounce on sugar-sweetened beverages to raise funding for health care programs, tamp down future health costs by attacking the public health crisis of obesity, and help close the state's budget gap, now estimated at $9.2 billion.

On Thursday the Governor proposed eliminating state and local sales taxes on bottled water and beverages with less than 10 calories in an 8-ounce serving. At the same time, he proposed expanding the sales tax base to include coffee and tea drinks bottled for sale if they contain more than 10 calories in 8 ounces. Low-calorie coffee and tea drinks would remain exempt from the state and local sales tax.

The Governor's proposal would ensure that local governments do not lose sales tax revenue as a result of the tax exemption for low-calorie drinks and bottled water. The State would also hold the Metropolitan Transportation Authority (MTA) harmless from the sales tax exemption, which otherwise would affect sales tax revenues that are funneled to the MTA.

"Obesity is absorbing more and more of the health care dollar, and the situation will worsen without aggressive change," Dr. Daines said. "In New York, 60 percent of adults and nearly one-third of children are either obese or overweight. Preventing unhealthy weight gain is less expensive than treating health problems aggravated by obesity, including diabetes, heart disease, high blood pressure, high cholesterol and cancer.

"Under the Governor's revised tax proposal, the price of a 20-ounce bottle of full-calorie soda and its diet counterpart would be more than 30 cents – certainly enough to affect some of the impulse drink purchases we make," he added. "Turning down one or two high-calorie drinks a week could make the difference for a child between a healthy weight and overweight."

More than 80 academic and medical studies over the past few years have demonstrated that sugar-sweetened beverages are the food category most strongly linked with the increased rates of obesity. The Institute of Medicine has recommended taxing these beverages to increase their price and discourage over-consumption.

Dr. Daines said he hoped this added incentive to buy lower-calorie drinks would heighten public support for the tax, noting that the most health-associated organizations already support taxing sugar-sweetened beverages, including the New York Academy of Medicine, the Greater New York Hospital Association, the Healthcare Association of New York State, the Center for Science in the Public Interest, Commission on the Public's Health System, Community Health Care Association of New York State, New York chapter of the American Academy of Pediatrics, the Medical Society of the State of New York, the state association of County Health Officials, the state Academy of Family Physicians, the New York State Dental Association and the New York State Nurses Association. More than 100 organizations have signed the Academy of Medicine's statement of support at www.nyam.org.

Elements of the Governor's proposal are:

  • The sugar-sweetened beverage tax as proposed in the 2010-11 Executive Budget would remain at approximately one cent per ounce – an excise tax of $7.68 per gallon for beverage syrups or simple syrups and $1.28 per gallon for bottled soft drinks, powders or base product.
  • The current State and local sales tax would be eliminated on low-calorie soft drinks (10 or fewer calories in 8 ounces) and bottled water. The State would hold local governments harmless from the revenue loss that would result from the sales tax elimination.
  • The State and local sales tax based would be expanded to include coffee and tea drinks bottled for sale if they contain more than 10 calories in 8 ounces. Low-calorie coffee and tea drinks would not be included in the expansion and would remain exempt from State and local sales taxes.
  • In some areas of the State, the sales tax includes a portion that funds the MTA. The Governor's proposal would hold the MTA harmless from the revenue loss that would result from the sales tax changes.
  • According to the Division of the Budget, the revised proposals would provide an estimated $370 million to the 2010-11 budget, and $815 million annually.