Soda is displayed in a grocery store. Lawmakers in Maryland are considering a new tax on sugary drinks like soda. (Bryan P. Sears/Maryland Matters)
Maryland lawmakers may impose the nation’s first dedicated statewide tax on soda and other sugary beverages — joining cities including Philadelphia, Seattle and Boulder, Colorado, that have created similar taxes.
Advocates say the proposed Maryland legislation would raise much-needed state revenue and incentivize people to avoid sugary beverages that are linked to health problems such as diabetes, obesity and heart disease.
“We can promote healthier choices, and we can generate revenue to support essential programs that benefit all Maryland residents, especially those in underserved communities,” the bill’s co-sponsor, Democratic state Del. Emily Shetty, said during a hearing Thursday.
But the proposal drew strong pushback from the soda industry and retailers.
Nebraska lawmakers also are considering raising taxes on soft drinks. The proposals come at a time when GOP lawmakers nationwide are lining up to advance the “Make America Healthy Again” agenda promoted by Robert F. Kennedy Jr., the new U.S. health secretary. As part of that broader movement, red states have aimed to remove fluoride from public water sources, roll back vaccination requirements and regulate candy and soda purchases in social welfare programs.
GOP lawmakers in several states have introduced bills asking the federal government to allow them to remove candy and soda from the list of eligible products that can be purchased with food stamps, officially known as the Supplemental Nutrition Assistance Program.
Like many other states, Maryland is facing a gaping budget hole: Lawmakers are grappling with a $3 billion projected budget deficit. Leaders fear that gap could further widen with declining federal aid.
The Maryland bill proposes a 2-cent-per-ounce tax on distributors of sugary beverages, syrups and powders. It would include sports drinks, diet sodas and other beverages with added sugars or sweeteners. The bill would exempt natural fruit juice, natural vegetable juice, milk, infant formula and water that is not flavored with sugar or sweeteners such as aspartame.
The Maryland bill is projected to raise nearly half a billion dollars per year. It would earmark $189 million for free breakfast and lunch programs, $50 million for child care subsidies and the remaining revenue to Maryland’s general fund.
Shetty acknowledged the bill could be viewed as regressive because groceries represent a larger share of budgets for families with lower incomes.
“That’s a fact. But what is also a fact is if you don’t purchase these products, you won’t pay this tax,” she said during the hearing. “Consumers will make healthier choices when treats cost more than their budget allows.”
Health experts testified for the measure. But the bill faces staunch opposition from Maryland’s soda industry, along with retailers such as grocers and convenience stores. During Thursday’s hearing, some Republican lawmakers expressed concerns about increasing costs on consumers and warned that the bill could push residents to buy groceries in neighboring Delaware, Pennsylvania and Virginia.
Opponents characterized the bill as an anti-business move that would push employers to cut staff or leave the state.
If you don’t purchase these products, you won’t pay this tax. Consumers will make healthier choices when treats cost more than their budget allows.
– Maryland state Del. Emily Shetty, a Democrat
The bill would tax distributors, leaving it up to those companies to decide how much of the cost to pass on to customers. But Marshall Klein, who operates a chain of grocery stores in and around Baltimore, said the measure would pinch retailers and consumers alike.
He said a $2.99 gallon of iced tea could leap to $5.50 a gallon, if distributors passed along the entire cost to consumers.
Some supporters argued the bill would specifically help Black and brown communities and low-income households, whom they say beverage companies target with their marketing of sugary drinks. But Klein, who said he runs two stores in urban food desserts, said raising the costs of products like soda will cut into family grocery budgets, making it harder to pay for healthy foods.
“This is a tax on people that don’t have any other options,” he said. “This is a group of progressive legislators trying to get a revenue option and tell people what they should and what they shouldn’t drink and how they should and how they shouldn’t live.”
The Maryland bill has not been scheduled for a committee vote yet.
Lawmakers in Nebraska are also targeting sugary beverages as a potential revenue source.
Facing a budget hole of at least $100 million over two years, Republican Gov. Jim Pillen proposed new taxes on soft drinks, candy, certain nicotine products and cryptocurrency mining facilities.
State Sen. Tom Brandt, a Republican, told Stateline the budget hole has made lawmakers “much more receptive than other years” to his idea to impose sales tax on products such as soda.
He proposed legislation to remove sales tax exemptions for candy and soft drinks, part of his wider effort to revisit the state’s dozens of sales tax exemptions.
Brandt, who expects the bill to raise $50 million per year, said he’s approaching it from a revenue standpoint, but acknowledged the health issues.
He said colleagues representing urban parts of Nebraska raised concerns about the bill because many residents rely on places such as convenience stores for food purchases.
“And my counterargument to that is they’re paying $3 for a bottle of pop,” he said. “They can pay 15 cents for tax.”
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