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Restaurant owners push back on proposed tax on sugary beverages

A proposed state tax on sugary beverages is unpopular among Hawaii restaurant owners.

Last week, Gov. David Ige introduced his legislative package, a collection of nearly 200 measures he intends to pursue this session. Among them was House Bill 994 and Senate Bill 1148, both of which would impose a 2 cent tax on each fluid ounce of all sugar-sweetened beverages sold in the state.

Under this policy, a 12-pack of 12-ounce cans of soda would cost an additional $2.88, while a six-pack of 20-ounce bottles would cost an additional $2.40.

And the tax would affect more than just soda: “any non-alcoholic beverage, carbonated or noncarbonated, that is intended for human consumption and contains any added caloric sweetener” would be taxed, according to the bill, which would include many juice and tea beverages. However, it would not affect prices of diet sodas, which do not use sugar-based sweeteners that contain calories.

The bills’ preamble states the negative effects of sugary beverages on residents’ health — 25% of Hawaii youth and more than half of adults are overweight or obese, both health problems linked to sugary drinks, while 71% of Hawaii third-graders suffered from tooth decay in 2016, the highest rate in the nation.

The bills also note the potential of the tax to help dig the state out the massive budgetary hole caused by the COVID-19 pandemic. According to the bills, if the tax was imposed in 2020, it would have generated $65.8 million for the state.

Restaurant owners are strongly opposed, however.

“We’re going through a pandemic right now, you know?” said Sarah Nguyen, board member of the Hawaii Restaurant Association and owner of Pearl City pizzeria the Pizza Press. “A lot of us are just struggling to survive.”

Victor Lim, legislative lead for the association, said similar sugar taxes have been suggested elsewhere in the country, but only implemented in a handful of places and never on any scale greater than a municipality.

“These taxes are very regressive,” Lim said. “It affects low- and middle-income people much more than upper-class people. … It’s targeting people without disposable income and small businesses during a pandemic.”

Nguyen said Mexico imposed a sugar tax, but obesity rates in that county have only increased since then.

“So it’s going to hurt local businesses, and it won’t even fix child obesity,” Nguyen said. “There has to be a better way.”

Lim noted that restaurants tend to have the highest profit margins on the sales of soft drinks, and added that cutting into those margins now would likely cause more restaurants to close.

“It’s just passing the costs to the consumer,” Lim said. “When you start taxing, owners are just going to be raising the costs for food.”

Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.
Source: Hawaii Tribune Herald

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