Joint Committee on Revenue
The Massachusetts Health & Hospital Association (MHA), on behalf of its member hospitals, health systems, physician organizations, and allied health care providers, appreciates the opportunity to offer testimony in strong support of
SB1562 / HB3329, “An Act to Promote Healthy Alternatives to Sugary Drinks.”
Sugary drinks are the single largest source of added sugar in the American diet. Sugary drinks, unlike junk foods which may contribute some nutrition to the diet, are just “empty” calories. That is, the caloric sweeteners in them have virtually no nutritional value. To make matters worse, sugary drinks have a unique and proven harm. Consumption is directly linked to expensive, chronic illnesses such as type 2 diabetes and cardiovascular disease. According to a 2010 study in the journal Diabetes Care, people who drink sugary drinks regularly—1 to 2 cans a day or more—have a 26% greater risk of developing type 2 diabetes than those who rarely have such drinks. And according to the American Heart Association, drinking just one sugary drink a day increases a man’s risk of having a heart attack or dying from a heart attack by 20%. Sugary drinks are an unnecessary part of the American diet. Decades ago these beverages were considered a treat, but are now consumed at alarming rates. From sports drinks to sodas to many fruit-flavored drinks, reducing consumption of these beverages as part of a heart-healthy lifestyle will help improve the health of our children and reduce the rates of type 2 diabetes, dental caries, and heart disease.
SB1562 / HB3329 seeks to reduce the consumption of sugar through a tiered excise tax on sugary drinks based upon the amount of sugar that the drink contains. These proposals would improve public health, reduce medical expenses, and advance the health reform ideals of the commonwealth while generating much needed state revenues. The bill recommends three tiers of taxation for these beverages: drinks with little or no added sugars will not be taxed at all; drinks with moderate amounts of added sugars will be subject to a smaller tax rate; and drinks with many added sugars subject to a higher tax rate. This is an excise tax levied at the distributor level and the underlying principles are similar to those that supported the establishment of increased tobacco taxes. Estimates show that it could generate more than $368 million for key programs across the commonwealth.
Early research shows that similar attempts to tax these products are effective at reducing sugary drink consumption. In Berkeley, CA, for example, a recent study found that sugary drink consumption in dropped by 21 percent in low-income neighborhoods during the first four months of implementation of a tax on these products, while water consumption increased by 63 percent compared to similar cities without the tax.
In Mexico, a sugary drink tax was implemented in 2014 as a step toward reversing the twin epidemics of diabetes and obesity. A study examining the first-year impact on beverage volume sales in Mexico after tax implementation reported that a tax of one peso per liter was associated with lower volume of sugary drinks purchased by a significant amount (six percent monthly average increasing to 12 percent in December 2014). The tax was also associated with higher volume of healthier drinks purchased --- specifically bottled water. In Mexico, a one peso per liter sugary drink tax was implemented in 2014. A 2017 study examining the changes in purchase of taxed and untaxed beverages over the first two years of the tax, found a 5.5% decline in sugary drink purchases in 2014 and a 9.7% decline in 2015, yielding an average reduction of 7.6% over the two-year period. The study also found that households at the lowest income level had the largest decreases in purchases of taxed beverages in both years. Purchases of untaxed drinks such as bottled water increased 2.1% during the study period.
Additionally, the revenue from the tiered tax excise tax on sugary drinks in
SB1562 / HB3329 will be dedicated to the Children’s Health Promotional Fund to provide critical funding for access to clean safe drinking water in our communities, to support the Prevention and Wellness Trust Fund, and other programs dedicated to helping children and families who are disproportionately affected by the consumption of these products. Beverage companies spend disproportionate amount of advertising dollars marketing sugary drinks targeted to communities of color. In fact, African-American children and teens see more than twice as many television ads for sugary drinks than their white peers. Lower-income African-American and Latino neighborhoods had more outdoor ads for sugary drinks than lower-income and higher-income white neighborhoods. And in these same neighborhoods, we see disproportionately high rates of heart disease, type 2 diabetes and other chronic diseases that are brought on, in part, by consuming sugary drinks. If policies like the tiered excise tax in
SB1562 / HB3329 are adopted, public health experts predict that taxes have the potential to be one of the most effective policy strategies to achieve health equity.
Studies show that an excise tax on sugary drinks can encourage people to make healthier beverage choices, improve health status, and reduce healthcare costs. Harvard researchers estimate that if the excise tax was just a penny per ounce tax on sugary drinks in the Commonwealth it would prevent 45,900 cases of obesity between by 2025 saving the Commonwealth $33.40 in healthcare costs for every dollar invested. A $.02 per ounce tax on sugary drinks would prevent 89,400 cases of obesity by 2025, saving the Commonwealth $65.60 in healthcare costs for every dollar invested. The proposed tiered tax would fall somewhere in the middle, likely closer to the $.02 per ounce estimate.
SB1562 / HB3329 does not put in place a prohibition on these beverages. People will still be free to buy sugary drinks if they choose. However, by placing a tiered tax on these products based on their sugar content, the government will be fulfilling its responsibility to protect the public’s health by putting a policy in place that has the potential to substantially reduce diseases such as type 2 diabetes and heart disease, reduce healthcare expenditures, encourage the reformulation of these products so that they contain little to no sugar, and even to increase healthy life expectancy.
Thank you for the opportunity to offer comments on this important matter. If you have any questions or require further information, please contact MHA's Vice President of Government Advocacy, Michael Sroczynski, at (781) 262-6055 or
msroczynski@mhalink.org.