An increase to West Virginia's soft drink tax, which has remained stagnant for more than 60 years, could serve as another way to bolster the state's flagging tax revenue while discouraging soda consumption, according to local policy experts.
Tara Holmes, the summer research associate for the West Virginia Center on Budget and Policy, told a group of stakeholders Wednesday during the group's regular Lunch and Learn that an increase in the state's existing soft drink tax, currently 1 cent on every single soft drink up to 16.9 ounces - anything larger is subject to another penny in tax - could equal millions in revenue that could be allocated to higher education, the state's Medicaid fund, or another public program.
"The good news is that we have a tax, which is one hurdle to get over. That structure is already set up. The bad news is that there's no state in the country that has implemented a serious soda tax," said Ted Boettner, executive director of the Center on Budget and Policy. "The other good news is that I think it's happening and it's going to happen ... there seems to be somewhat bipartisan support in other states to move in this direction."
The state's soda tax, established in 1951, is an excise tax included in the cost of every non-alcoholic packaged beverage or powdered drink mix sold in West Virginia, excluding undiluted fruit or vegetable juice and unsweetened milk. Revenue from the tax goes to West Virginia University to fund its medical, nursing and dental schools, and the state generated $15 million last year in "soda tax" funds.
A handful of states and cities have some form of soft drink tax; Arkansas has the most aggressive state tax at 2 cents per 12 ounces, while cities like Berkeley, California and Philadelphia have leveled larger taxes of 1 cent per ounce and 1.5 cents per ounce, respectively.
Holmes said that for the state to implement a tax that could potentially both generate revenue and bring down soda drinking, it would need to look at the possibility of creating a 1-cent-per-ounce tax, but that because such taxes aren't common, there isn't enough data to say whether an increase would result in better health outcomes.
"It's not definitive; the British Journal of Medicine published a study on [Mexico's soft drink tax], and it showed that it did reduce consumption by nine percent in low-socioeconomic-status households ... and they've said, hypothetically, that a penny-per-ounce tax could reduce consumption by up to 10 percent, but because there are so few places that have done it, there isn't any hard data that is proven, so they look at what tobacco taxes have done to reduce smoking and use that as a template to say 'This would happen with soda as well.'"
According to a report released by the Trust for America's Health and the Robert Wood Johnson Foundation, West Virginia has the second-highest adult obesity rate in the nation at 35.7 percent. According to a research report in Diabetes Care, people who consume sugary drinks regularly - one to two cans a day or more - have a 26 percent greater risk of developing type 2 diabetes than people who rarely consume such drinks.
"Liquid sugar bypasses the physiological regulatory system that controls appetite and food intake, so when you consume soda, it doesn't make you feel full," Holmes said. "You're just consuming calories, but if you eat a candy bar or a Big Mac, even though it's unhealthy, you would feel fuller, and would therefore compensate for the calories you consumed. It's also been shown that people who consume more sugary drinks consume more calories from any source."
Holmes pointed to Arkansas' tax, which helps fund its Medicaid program, as an example of how West Virginia could allocate revenue generated by an increase in the soft drink tax. More than 500,000 West Virginians are enrolled in some form of Medicaid coverage, and the cash-strapped legislature will be looking for ways to continue to fund the program, which will require a 5 percent funding match to federal funds for the state's Medicaid expansion population starting in 2017.
"Disproportionately, lower-income people drink more soda than people in higher income levels, so technically...the tax is regressive, but they would be benefiting from reduced risk of obesity and diabetes or chronic illnesses related to those things, and the funds generated from the tax, if you earmarked them, would be going back into those communities," Holmes said.
Reach Lydia Nuzum at lydia.nuzum@wvgazettemail.com, 304-348-5189 or follow @lydianuzum on Twitter.