Senate Bill 1148 – Taxing Sweets

Picture of 3 coca cola cans in the sand

By: J. S.

Should Hawaii put a tax on sugary beverages? A bill proposed in the Hawaii legislature in 2021 thinks the answer to that question is yes. Senate Bill 1148 proposes adding a two cent tax per fluid ounce to certain sugar sweetened beverages (SSB’s), the highest tax in the nation on SSB’s, followed by Boulder, Colorado. The goal of the tax would be to discourage the purchase of “unhealthy” beverages, simultaneously raising funds to combat current public health concerns. According to the bill, proceeds raised would be used to create a special fund into which revenues would be deposited, funding programs to prevent obesity and chronic disease among Hawaii’s citizens. The fee for selling SSB’s would be imposed at the distributor level, and then trickle down to the public. Introduced in January of this year, the bill passed its first reading and was referred to House committees, but has not moved since January 29. You can read the full bill here.

SB 1148 bases its recommendations on current state health statistics. One study mentioned in the bill highlights dental issues among Hawaii’s minors, especially third graders. Hawaii leads the nation in highest incidents of third grade tooth decay; 71% of third graders in the state are affected. Additionally, Hawaii has high proportions of obesity and health complications related to food consumption. According to the bill, one out of four middle and high school youth and more than half of adults are overweight or obese. 61% of Hawaii adults are living with at least one chronic disease such as diabetes, heart disease, or cancer. Although these are concerning health statistics, it is quite unclear that a tax on sugary beverages would have its desired effect on improving current health issues.

According to SB 1148, A 2017 study conducted by the Harvard T.H. Chan School of Public Health and the Hawaii Department of Health found that a sugary drink fee has major cost savings. However, another 2017 study conducted by the consulting firm New Zealand Institute of Economic Research concluded that “no study based on actual experience with sugar taxes has identified an impact on health outcomes.”

Currently, there is little to no evidence from the real world cases that increasing taxes on sugar will decrease obesity levels in a population. The NZIER study found that evidence of sugar taxes improving health is weak due to multiple factors. One such factor is that there is a chance people will simply choose to purchase untaxed, equally unhealthy food options. The bill also doesn’t speak to how the tax will affect different parts of the population. While the tax will have no effect on those who can afford to ignore the cost increases, it will burden citizens with already limited shopping options. This brings to mind the idea of food deserts, which impact both rural and urban populations on the islands. Food deserts are areas where residents have a higher difficulty accessing healthy food options, and are therefore limited to what is close and convenient. In the midst of the current economic burdens in Hawaii, it is evident that the tax increase would raise the additional funds, estimated at $65,800,000 by the bill, but it is quite unclear that the stated intention of the bill, improving public health, would effectively be met.

An alternative to raising prices on sugary foods is to make local, fresh, healthy foods more readily available. Encouraging local agriculture and supporting laws to make it economically feasible for Hawaii’s farmers, food distributors and retailers to sell locally grown products on the islands might be an alternative to taxing sugar. As it currently stands, there is no sound reason to believe that a tax on SSB’s would create positive change for Hawaii’s citizens or their health. In fact, the bill may have unintended consequences for both businesses and individuals trying to make ends meet. You can follow this bill and others at capitol.hawaii.gov.