Soda makers: Don't tax our soft drinks

— -- Industry groups are fighting a soft-drink tax proposal that is not part of any pending health care measure.

Still, they're taking no chances. The American Beverage Association has begun a $2 million ad campaign to oppose a tax on sugar-sweetened drinks, depicting it as a tax on "simple pleasures."

Last month, the group joined forces with the National Restaurant Association and the Grocery Manufacturers Association to launch Americans Against Food Taxes, a coalition of 110 state and local groups.

As President Obama and members of Congress hold town-hall-style meetings on health care, the sugar-tax debate is brewing in the capital.

"There's a good argument that can be made" for taxing the causes of chronic, costly illnesses, says Rep. Bill Pascrell, a Democrat from New Jersey who has a diabetic son.

Proponents, citing how higher tobacco taxes reduced smoking, are pushing a tax on sugar-sweetened beverages, including fruit and energy drinks, to fight obesity and fund a health care overhaul.

"This is one option," says Thomas Frieden, director of the Centers for Disease Control and Prevention, adding that his view does not represent the Obama administration. He points out that obesity is a growing problem, and taxpayers foot half the cost through Medicare and Medicaid. He says soft drinks are the single largest contributor.

"If it costs more, people will drink it less," Frieden says. He says a penny-an-ounce tax could reduce consumption by more than 10% and raise $100 billion over 10 years.

House and Senate committees looked at the tax earlier this year but, as opposition mounted, dropped it from their menu.

Most states tax soft drinks, often as part of broader taxes on food or vending machine sales.

"People view it as an overreach of government when the tax code is used to tell them what to eat and drink," says Kevin Keane of the beverage association. He says the tax hurts low- and middle-income people most.

"It makes no sense to single out one product," Keane says, noting a recent dip in soda sales. In the 1990s, sales rose an average of 3% a year but began falling in 2006, says John Sicher, editor of Beverage Digest, an industry publication.

A report last month by the Urban Institute, a non-profit research group, does not single out soft drinks. It proposes to tax all fattening foods, including chocolate, based on a British model that calculates a food's nutritional value against its calories. It suggests using part of the $500 billion raised over a decade to reduce the cost of fruits and vegetables and increase food stamp allotments.

"If you want to eat food that makes you obese, that's your right," but you should help pay the societal costs, says co-author Stan Dorn. He says a tax could help low-income people by paying for health care and healthier foods.