Governor Patrick has again proposed removing the sales tax exemption on candy and soda in this year’s budget. It will raise an estimated $52m of which a portion will be dedicated to health and wellness programs to fight childhood obesity and other public health afflictions.
The legislature passed on the idea when Patrick proposed it last year. Early indications are they may not be too interested in it this year again, or so say the two Ways and Means Chairs in the Globe:
” They’re taxes, and even small increases like these are, for many members, not going to be palatable,” said state Senator Steven C. Panagiotakos, chairman of the Senate Ways and Means Committee.
“There’s a general sense of skepticism about tax increases,” said state Representative Charles Murphy, the chief budget writer in the House.
You don’t say. But all Patrick is saying is that candy and soda don’t merit an exemption but should be taxed like other non-essential goods. And despite my own sweet tooth, candy and soda are not essential – unless of course you think obesity is a good thing.
The case against removing these exemptions becomes more ludicrous when you look at the type of things that people actually need that are subject to sales tax. A look at the Department of Revenue’s sales tax guide shows that many items a lot of folks would consider necessities, like shovels (can’t live easily in the Bay State without one) or over-the-counter medications (allergy pills are something many need every Spring) or thermometers, are subject to sales tax – while a Snickers bar (my own personal favorite) or Cherry Coke is not.
Doesn’t make a whole lot of sense to me. Books get taxed, children’s car seats get taxed, washing machines get taxed – all of much greater necessity to people than a bag of M of M’s (another favorite of mine).
I guess I start from the premise that sales taxes should be broadly applied to all goods unless there is a good reason why they shouldn’t be. Of course sales taxes are regressive so it makes sense to look at items people can’t live without and take the tax off them. But while people at all socio-economic levels eat junk food, the same is true for booze or smokes and yet we apply pretty hefty taxes to those vices to change behavior.
So really when it comes down it, continuing to exempt candy and soda from the sales tax is just dumb. There is a much better argument for taxing these goods at a higher level due to the maladies they cause then for not taxing them at all. And yet for some reason, the legislature thinks it more justified to allow someone to get a tax freebee for a Starburst then for school supplies.
But my feeling is that Mr. Panagiotakis and Murphy will come around. Legislative leaders always say there is no appetite for taxes. Its like five-year olds being asked whether they have an appetite for broccoli. Of course they don’t. But just as kids eventually put down the greens when threatened with losing their desserts, the legislature will hopefully find it better to tax Jujubees then to cut funding for those truly in need. The $52 mil we can raise bringing taxes on Dr. Pepper up to the same level of vitamins is money we can no longer afford to go without.
Elections make people do funny things..like not voting for taxes.
Getting rid of this exemption won’t even register as an issue by comparison.
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p>Its not the voters but the interest groups that they might be fearing – the shopkeepers, the food and beverage lobby, that will make this sound like they are taking candy away from your baby. If they can ride out that special interest outrage this is an easy $50m. Its a lot better than laying off more teachers.
It ain’t happening.
You have to answer either the question of which taxes to raise or which spending to cut if you want to be credible with me.
Chris:
I don’t have an answer for your rather silly retort. I am suggesting to you that the legislature will NOT raise taxes. I have no idea what they cut, nor do I have any idea what they should cut. I just know they will not raise taxes in an election year. If I’m not credible with you then my day is ruined!
He may be happy to have a tax increase he opposes to talk about right now, even a small, symbolic one like this one.
The Obama administration has only cut taxes. Let’s not take the wrong lessons from this election, because not only will it not help us win future elections, but it will also result in worse policy (which will further reduce our ability to win elections).
The idiocy of the General Court, however, pretty much demands that they reject the removing the exemption because it makes too much sense. I never really thought very much about this issue until now. Now I’m really depressed. $52 million is a freakin’ lot of money. Imagine how much in tax revenue we would have realized had these items been taxed appropriately right along? Tax the Snickers (my fave, too) and the Coke; exempt school supplies. I’m all for that. Fund education and wellness programs. Win/win.
How much does W.B.Mason sell to K-12, and how much to offices?
Some food is obviously worse than others, but I’m curious to what the criteria are. Plenty of food is full of fat, etc. and others cause cancer in lab rats. There are studies that would suggest benefits of certain things usually considered bad too.
I think it’s safe to say that candy and soda is both bad for health and very accessible. They’re often packaged right next to each other, right before you get your goods ringed up. And you don’t have to cook it. It’s merely a little, tiny nudge to get people to eat healthier. This is the political version of low-hanging fruit.
Chocolate is candy, pretzels aren’t. Chocolate covered pretzels? Gum is candy, smoking cession products aren’t. Nicorette? What about sprinkles or jimmies?
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p>Sure, the stuff sold below the cash registers at CVS is candy. Clearly though there’s a line drawn somewhere. I don’t quite know where they’ll draw it.
Count Chocula? Boston cream pie? Ice cream? Popsicles?
I’ll try and check that out.
I attended a fundraiser for a local church youth group today whereby you paid $10 admission and got to sample all kinds of things made primarily of chocolate. They were distributing a flyer with some facts about chocolate including health benefits, to wit:
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p>Chocolate contains tryptophan which helps the body produce serotonin, a natural antidepressant.
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p>Chocolate contains antioxidants that can protect against cancer and heart disease.
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p>Chocolate is rich in magnesium and iron, both important minerals.
like Hershey’s which has more sugar and chemicals than cacao content, and dark chocolate which typically has fewer ingredients and less sugar. I’m definitely a chocolate connoisseur so I won’t touch the checkout line crap. 🙂
Why do I think that the foods being proposed for the additional tax are more often eaten by people with lower incomes? Another regressive tax in action, it seems…
These are by no means dietary staples. Anybody who doesn’t want to pay the tax doesn’t have to buy the product.
since, as a percent of income, poorer people consume more gasoline, candy, public transit, video games, Chinese dinners, basketballs, yarn, cigarettes, and so forth. That doesn’t, however, mean it’s a bad idea, particularly if the consumption of that item has detrimental internalities or externalities.
…however, in response to you and Christopher, I’d ask if chocolate chips and Baker’s chocolate would be similarly taxed. Take the average income of somebody who buys candy bars, and somebody who makes theirs.
…about going down the taxing food road. I’m afraid we’ll end up having to draw up very specific lists of what is and is not taxed, and there will always be someone to question why a particular item is on one list rather than the other. That being said, I’m not terribly concerned about taxes on non-essentials being regressive as people have a choice to purchase or not. I’ve always felt consumption taxes would be progressive though at least from my standpoint. When I live paycheck to paycheck I spend very little on taxable items, but when I have more disposible income I also tend to spend more on taxable items, both in real dollars and as a percentage.
I can see how they might easily cross the line with candy, extending it to some legitimate food items. Maybe they should just limit it to carbonated beverages and leave it at that.
I have no idea how good a job they do, but they have the “candy and soda” exemption on the sales tax exemption.
I’m certainly not advocating the taxing of milk. However, it still seems to me that we’re taxing the more convenient form of a product and leaving the less convenient ones alone…which is inconsistent and results in a better situation for higher-income people. These are the murky problems of nanny-state taxation.
I think we should eliminate these reductions because the state needs the money and there is no good reason to exempt candy and soda.
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p>The premise that we use “health benefits” to determine tax policy is utterly absurd in a nation that refuses to do anything about providing universal health care. The best person to make recommendations to a young mother about what she should and should not feed her toddlers is her doctor, not her accountant.
“Candy”: a preparation of sugar, honey, or other natural or artificial sweeteners in combination with chocolate, fruits, nuts or other ingredients or flavorings in the form of bars, drops, or pieces. “Candy” shall not include any preparation containing flour and shall require no refrigeration.
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p> “Soft drinks”: non-alcoholic beverages that contain natural or artificial sweeteners. “Soft drinks” do not include beverages that contain milk or milk products, soy, rice or similar milk substitutes, or vegetable or fruit juice.
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p>Not that these definitions don’t cause issues. A Kit-Kat bar is not “candy” (since it has flour). A Popsicle is not “candy” since requires refrigeration. And a Diet Coke is still a “soft drink” even though it has no calories.
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p>But the definitions are clear.
They didn’t pass this last year, when they passed a big sales tax, and we have Speaker DeLeo going around telling everyone there’s not going to be any tax increases this year in the very same paragraph as when he says he thinks we need casinos… I think it’s pretty clear that he’s not going to allow any tax hikes till he gets his racinos/slot parlors.
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p>Perhaps the blog talk we should be having is whether or not we need a change of leadership in the House.
the lege has (correctly, I think) observed that the sum is less than its parts in terms of political damage. That is, raising a group of perhaps related taxes all at once does less political damage than raising them individually. They should have raised the candy and soda tax last year when they passed the sales tax increase, so they don’t have go get whacked twice in one election cycle about raising the sales tax.
That’s not even a tax, but rather an optional user fee. Raising bottle deposits to $0.10 would raise recycling rates (probably to the level of Michigan, the nation’s leader and the only state with $0.10 deposit). Expanding bottle deposits to cover water and juice would go a long way too. Want to get even more clever? Put a $0.25 deposit on wine and booze bottles.
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p>Recycing rates go up. The state takes in more money in user fees. Cities and towns see a decrease in costs because they have to process less recycling curbside. Litter rates go down.
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p>It wouldn’t be a home run, since it isn’t a game changer for any of those categories… but it does result in improvements for all of ’em.
liveandletlive links to a news article below…
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p>Heck… if the lege “just” allows the bottle deposit and the tax on airplanes, you’ve just generated $25M a year and it’s not too hard to point out that (a) it’s progressive, and (b) it’s easy for 99.9% of citizens to avoid paying anything more.
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p>In the mean time, you make the tax code a smidge simpler (no longer an exemption for airplanes), and you make the rules for bottle deposit simpler (no longer a detailed list of exemptions).
It’s not like he wants to make the tax on soda and candy increase to 7 or 8 percent. He just want it to be taxed as everything else is.
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p>I think it should be subject to sales tax and the exemption should be removed. I will write to my reps in support of removal of this exemption.
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p>But I don’t think the money should just be used for obesity and health programs. That’s like saying the 6.25% tax collected on paper towels should be spent on how to reduce paper towel use, or finding ways to make better paper towels. (Directing funds for a particular program would only be appropriate if the tax was higher than the standard sales tax) You don’t need an excuse (such as protecting public health)to tax these items. This just outrages some people because it appears you are trying to control them. Just remove the exemption because it’s an unfair exemption to begin with.
And I think your point about how the money is used is on the money. This long-term trend of dedicating revenue streams to certain programs is self-defeating as it reduces the flexibility we need to adapt as priorities shift. It would be far more efficient to raise revenue from the best sources we can and then once the revenue is collected determine what is the best way to spend it. Politically though, the imperative in selling taxes is that they go to certain causes. Its a way of moving the public but ultimately hurts the ability of government to best use resources.
I don’t like dedicated revenue streams in general either; it becomes hard to have that flexibility.
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p>I do think it’s appropriate in some specific cases, like tobacco. Why is tobacco a special case? No amount is ever healthy, and driving use to nearly zero is a clear public policy objective… one which will reduce overall government cost. The flip side: you don’t want the revenue sheet to “get used” to that tax revenue, since you’re trying to drive it down to zero. In that case, dedicating the stream makes sense.
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p>Not as much with the candy stuff. There’s no public policy objective to drive candy consumption to near zero, nor should there be. The trouble is this: how do you make sure it doesn’t come off as “oh there goes the Dems/politicians again, coming up with another excuse to get their grubby hands on more of my money…”
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p>My response: find something else to stop taxing to make it revenue neutral, or at least more-so. Maybe that’s some kinds of OTC drugs, for example. Maybe it’s the sales tax on autos which get 40+ mpg. Maybe it’s the sales tax on bicycles!
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p>because that’s exactly how it comes across. Your point in an above comment is true, that they should have done it all at once and taken one public anger hit instead of two.
Mass. Gov. Deval Patrick proposes to raise $100 million in new taxes, fees
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p>It’s amazing how the media has way of conveying the message in a way that will outrage people.
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p>Ruh Roh! People are not going to be happy about this.
The way this article puts it all together, it’s clear that all of these tax increases hit the middle class and poor. In the meantime, people making more than $250,000 a year are sitting pretty on their bank accounts, untouched by government tax increases. I guess it takes a long time to learn lessons.
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p>Airplanes weren’t taxed? Huh? Or is this the hit on the wealthy. Geez, that one’s really gonna hurt. How often do they buy airplanes.
Mass. Gov. Deval Patrick proposes to raise $100 million in new taxes, fees
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p>It’s amazing how the media has way of conveying the message in a way that will outrage people.
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p>Ruh Roh! People are not going to be happy about this.
The way this article puts it all together, it’s clear that all of these tax increases hit the middle class and poor. In the meantime, people making more than $250,000 a year are sitting pretty on their bank accounts, untouched by government tax increases. I guess it takes a long time to learn lessons.
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p>Airplanes weren’t taxed? Huh? Or is this the hit on the wealthy. Geez, that one’s really gonna hurt. How often do they buy airplanes.
I think that candy and soda should be taxed, and this is coming from someone who drinks two liters of diet coke per day. I also think we skimp on the alcohol tax. Alcohol should be taxed on par with cigarettes since it causes as much health issues and more innocent tragedy. Why is taxing the heck out of alcohol, the way we tax cigarettes, some kind of sacred cow?
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p>Rhonda
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p>2. About 16% of Masshole adults are smokers; how many drink at least occasionally? I’d bet about triple that rate.
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p>3. Not a whole lot of cigarette products are manufactured in MA; we do have a few brewers though.
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p>Here’s what I don’t get though, w.r.t. smoking:
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p>a. According to MGL 270-6, adults are allowed to give tobacco products to minors. Just amend that.
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p>b. In some states (and counties), the purchasing age for cigarettes has been raised to 19 (cigarette sales restrictions). Why not raise the age in Massachusetts?
So if you drink a few beers on a Saturday night or an expensive bottle of wine with dinner, pay the tax. 25% of all ER visits are related to alcohol. Many car accidents and auto deaths and injuries are as well. I am not advocating prohibition, but I am advocating that those who drink pay a fair share of tax relative to the issues involved with drinking. Not everyone who smokes gets a smoking related illness. People who belong to the category of alcohol consumers, should be taxed relative to the risks experienced by all of those who consume alcohol. I would say about 20% of the cost of the alcohol. It Would raise revenue and might well reduce the amount of alcohol that is consumed.
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p>Rhonda
merely responding to the question you posed.
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p>As for the medical issue, the FDA has been super clear. Every single cigarette a person smokes causes his or her health to decline. They have not made a statement anywhere near as strong with respect to alcohol. The first butt of the night always diminishes one’s health; the same isn’t true for alcohol, with “one drink” or beer/wine/whatever per day often cited as having positive health impacts.
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p>In addition to the sales tax (or restaurant tax), there is both state and federal excise tax. That tax is calculated by volume, as a function of potency, and the state and federal formulae differ. The sum of federal and state excise tax is about $0.06 per bottle, and so for cheaper beer (in bulk) it’s close to 10%. Plus the 6.25% sales tax, which is assessed on the post-tax total. Of course, in a restaurant that sales tax is a meals tax of 6.25%, plus any local options.
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p>I don’t know what the “right” amount is, but the tax right now on most beer is somewhere between 10% and 20%, depending on circumstance.
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p>The problems you reference have nothing to do with the amount of alcohol consumed per se, but rather the amount of alcohol consumed by any given individual in a relatively short period of time, as a function of food eaten, health, and weight, and in particular if he will be responsible for transporting himself, or has a propensity to be physically violent. Therefore, simply reducing the amount of alcohol consumed doesn’t really crack the right nut.
A reduction in the use/abuse of alcohol would be a good thing, or if you like, not a bad thing. A culture that is less tolerant of alcohol use might be an improvement as well. Look at the impact of alcohol on teens, on adults, on domestic violence, on criminal behavior, car driving, etc. Drinking does lead to social ills and costs. I don’t think you can deny that. I think what you are trying to say is the average person who enjoys beer, wine and or an occasional drink should not be taxed for the risks incurred by those who abuse.
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p>it is a tax worthy of consideration, none the less..
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p>Rhonda
we should treat alcohol taxes differently than most consumer goods. And, we do. Are we getting it exactly right? Dunno.
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p>We should also recognize that tobacco and alcohol products are fundamentally different because every single dose of tobacco is harmful to health; the same is not true of every single dose of alcohol. It really is an important distinction, and can help to explain the remarkably different tax policy that’s developed over the past 5 years w.r.t. tobacco (but not w.r.t. alcohol).
The whole reason why alcohol was exempt from sales tax until the recent change was that it is subject to additional taxation on the wholesale level. Furthermore, the need to purchase a liquor license is an indirect booze tax, and liquor licenses are much much more expensive here than in most states. (Which is why you almost never see a hole in the wall place that serves beer and wine, like you do elsewhere)
A small amount of tax money raised through confusing rules and demanding new paperwork from small businesses. I wouldn’t want to own a convenience store and try to implement this extensive and confusing new regime. This is a boon for paperwork, certainly.
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p>There’s on consistency to speak of, either. We don’t tax high-fructose corn syrup “fruit juice” but stick it to diet soda? What about half-diet soda? Are Life Savers candy, but not Luden’s cough drops? Heck, shortening and butter are more fattening than any candy bar.
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p>There’s no ideological consistency in this. It’s a naked tax grab without inherent sense, logic, or system. May as well tax foods that have a dipthong.
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p>Republicans don’t need to lie about Democrats if Democrats are going to be this stupid.
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p>This is nonsense. Convenience stores already deal with a variety of different taxes — maybe more consumer taxes per square foot (plus one more if they’re also a gas station).
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p> * cigarettes
* other tobacco products (lower than cigs)
* beer/wine
* deposits on soda and beer but not juice
* sales tax on some items (koozies or whatever)
* prepared food tax on those hot dogs on rollers
* lotto tickets
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p>The cash register “knows” the difference bewteen taxable and non-taxable (food). All that happens is one time the register needs to be reprogrammed, quite possibly with the help of the national 7-11 chain or the vendor. Then, the tax lists are generated off the register or off the inventory lists, but again that’s one-time programming and the number of SKUs in a convenience store is relatively small, maybe 1,000 or so.
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p>I agree that it’s not a bright line between candy and not, between soda and not. That’s problematic for me, and I raised that question above. But, given that we already exempt some food (frozen dinner in plastic tray, in a box) but not others (frozen dinner in plastic tray, assembled by the grocery store or quik-market), this doesn’t add any new level of confusion.
let make life really interesting for the convenience store owners – lets raise taxes in the middle of the day – oops sorry we already did this 🙁
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And an argument could be made that such taxes [on items with no intrinsic value or worth that are not ever ‘needed’] is spreading the social risk.
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p>Cigarettes and lung cancer, candy and obesity, alcohol and alcoholism/auto accidents all create government costs that have to be paid for, after all.
taxes on the middle class and poor Americans, then they should also raise them on those making more than $250,000yr.
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p>There has to be a way. There never seems to be a loss of creativity for raising taxes on other groups.
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p>What about a 1% luxury tax? Since who knew airplanes were tax exempt, are there any other exemptions in place for high ticket items that we wouldn’t know about because we never buy such things? At least this would balance the tax increase burden a little.
Airplanes are exempt because they are “mobile” – all that will happen if you tax them is drive the firms that sell them out of state.