Battle Lines Drawn Over Soda, Junk Food Taxes

Increasingly vocal calls for taxes on sugary drinks and junk food are fueling a behind-the-scenes battle that public health officials say is reminiscent of America's war on cigarettes.

The U.S. obesity epidemic has blossomed into a public health crisis and overweight adolescents are starting to suffer problems that used to plague middle-aged adults -- early heart disease and type 2 diabetes.

While restaurant operators and food and soda makers promote personal responsibility and moderation, backers of the taxes say levies on foods that quickly add extra pounds are a necessary part of any successful anti-obesity effort.

Backers suggest taxes could help offset the estimated $147 billion cost of treating obesity-related diseases and fund programs to battle the expanding girths of Americans.

Adding to the pressure is the fact that cash-poor state and local governments are scrambling to raise revenue. Junk food taxes give them an opportunity to boost taxes under the guise of doing good, says Bob Goldin, executive vice president at restaurant consulting firm Technomic.

"The train has left the station," Goldin added.

Sweet Source of Revenue

The Congressional Budget Office estimated in December that a tax of 3 cents on every 12-ounce can of soda would raise $50 billion over 10 years. Not surprisingly, a soda tax is among the revenue streams being eyed as U.S. lawmakers tackle healthcare reform.

About 58 percent of Americans are willing to bear a tax increase of 1 percent or more to support healthcare reform, according to a recent Thomson Reuters survey.

Although a debate rages over the efficacy of taxes on soda and other items, supporters point to the fall in smoking rates after taxes sent cigarette prices soaring.

"The research around tobacco has shown that large increases on taxes on cigarettes has been the single most effective policy to reduce tobacco use," said Mary Story, a dietitian and public health professor at the University of Minnesota.

Story figures that a 10 percent increase in sugar-sweetened beverage prices could cut consumption by 8 percent to 10 percent.

Taxing by the ounce would be more effective than a flat tax because it would put a larger burden on bigger soda bottles, which often sell for much less money per ounce, said Kelly Brownell, director of the Rudd Center For Food Policy and Obesity at Yale University.

"It's just a matter of time" before taxes come into effect, said Brownell, who published an article in the New England Journal of Medicine in April arguing for a tax on sweet drinks. The article was coauthored with then-New York City Health Commissioner Dr. Thomas Frieden, who is now director of the U.S. Centers for Disease Control and Prevention.

On Frieden's watch, New York banned artery-clogging trans fats from restaurants, required some chain restaurants to publicly post the calorie content of the food they serve and banned smoking in all restaurants.

Now, on the heels of a new American Heart Association recommendation to dramatically cut dietary sugar intake, New York City's health department is launching an anti-sugary drink ad campaign that reads: "Are you pouring on the pounds? Don't drink yourself fat.

Bitter Battle

Critics say new "sin tax" plans would turn the nation into a nanny state, hurt business, threaten an already weak economy and place an unfair burden on low-income shoppers. And groups such as Americans Against Food Taxes are striking back.

That organization has big-name backers such as juice maker Welch's, PepsiCo Inc, the American Beverage Association, the Corn Refiners Association, agribusiness giant Cargill Inc and restaurant chains ranging from fast-food purveyors McDonald's Corp and Burger King Holdings Inc to Olive Garden owner Darden Restaurants Inc.

Its website warns that taxes on sugary drinks would have a "negative impact on American families struggling in this economy." A narrator on its television ads, which feature a family camping trip, says: "Taxes never made anyone healthy. Education, exercise and balanced diets do that."

Reporting by Lisa Baertlein; additional reporting by Maggie Fox in Washington, DC; editing by Andre Grenon