Tue February 22, 2011

Colorado Republicans Take Aim at Soda Tax

A measure coming up for debate at the state capitol would ratchet back sales taxes on Coke, Pepsi and other soft drinks.

Colorado is one of 30 states that taxes soft drinks.  And that was only as recent as last year, when state lawmakers voted to remove a tax exemption that allowed sodas, as well as candy, to be sold with no sales tax. 

Republicans argued that the move was illegal under the Tax Payers Bill of Rights, but supporters maintain they didn’t raise taxes; they simply removed an exemption allowing the items not to be taxed. 

Now republicans are proposing that the 2.9 percent sales tax be repealed for soda, while the candy tax would remain intact.  The thought was that a higher tax could raise revenue for the state, and also help combat childhood obesity.  The health benefit though, has been widely disputed. A study from the Rand Corporation found that taxes of 4% or less on sodas did very little to reduce consumption. 

Still, a supporter in Colorado say that the economic benefit has been good, generating roughly $17.9 million.  If repealed it could cost the state about $12.3 million, at a time when Colorado faces a $1 billion shortfall and is facing the largest cuts ever to k-12 education.

Republican representative David Balmer says his bill to repeal the sales tax will help struggling families save a few pennies at the grocery store.  The measure will be up for debate at the state capitol Wednesday.