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Maryland lawmakers will be asked to sweeten the state鈥檚 coffers by adding a tax on sugary drinks projected to raise nearly $500 million annually.
If passed, Maryland could become the first state to tack a 2-cents-per-ounce tax on sugary drinks, syrups and powders. The money raised would be earmarked for free school meals, child care subsidies and the state鈥檚 general fund.
鈥淲e have significant funding shortfalls for very high-priority programs in our state, and we also have on top of that, a public health crisis,鈥� said Del. Emily Shetty (D-Montgomery), lead sponsor of the measure. 鈥淥ur health care costs are going up. We have significant enrollment in all of our health care programs, which is a good thing, but we can鈥檛 only address health costs on the back end.
鈥淲e have to think about common-sense, evidence-based measures that help bring down costs for our health care system, and that includes efforts like this,鈥� said Shetty, a member of the House Appropriations Committee.
Her measure,聽聽is co-sponsored by House Health and Government Operations Chair Joseline Pe帽a Melnyk (D-Prince George鈥檚 and Anne Arundel). There is no Senate version of the bill.
The so-called 鈥淔or our Kids Act鈥� is similar to laws in Philadelphia, Seattle, Boulder, Colorado, and Berkeley, Calif.
House Minority Leader Del. Jason C. Buckel聽 (R-Allegany) said the fact that Shetty and Pe帽a-Melnyk are on the bill means it is 鈥渕ore than just a sort of trial balloon from the proverbial far left field.鈥�
鈥淲e certainly take it seriously. It鈥檚 not a proposal from a backbench kind of person,鈥� he said.
As proposed, the bill would impose a tax on distributors of sweetened drinks. Powders and syrups would also be taxed based on the total ounces of drink that each container could make.
Automatic annual increases in the bill are tied to inflation. In years when there is negative inflation, the tax rate would remain the same but not decrease. The proposal is similar to how the state calculates gas tax rates each year.
The tax is based on volume rather than sugar content.
In addition to the municipalities that have passed sweetened beverage taxes, some states have considered similar measures but none have so far passed it into law.
Shetty modeled her bill on a 2017 Philadelphia law that raised more than $400 million in fiscal 2022.
The bill earmarks $189 million of any Maryland tax for free breakfast and lunch programs for every public school student and qualifying private schools. Another $50 million is set aside for state child care subsidies. The law requires that the money not supplant current budget allotments.
The balance of the money 鈥� about $210 million 鈥� would go to the state鈥檚 general fund.
鈥淚 fully support the goal of making Maryland healthy again, including efforts to reduce sugary drink consumption,鈥� said Del. Kathy Szeliga (R-Baltimore County). 鈥淗owever, any new tax must be offset by an equal reduction in total sales tax. If this is truly about public health 鈥� not taxes 鈥� it could be a win-win by improving health while lowering taxes for all Marylanders.鈥�
Buckel called the proposed levy another sin tax at a time when people are still feeling pinched economically.
鈥淚t鈥檚 kind of jarring to suggest that, at a time when we talk about everyone鈥檚 cost of living going up so much, and there鈥檚 a rally every week about how we have to protect and work for people who are struggling financially, they鈥檙e initiating higher sales taxes on sort of staple products, or however you feel about soda,鈥� he said. 鈥淭he truth of the matter is, a lot of people drink soda, either a lot or at least somewhat.鈥�
Shetty said consumers would have a choice and soft drink purchases 鈥渁re optional.鈥�
鈥淭hey are not a required part of anyone鈥檚 diet,鈥� she said, adding the tax is 鈥渁 bit of a win-win.鈥�
鈥淓ither it helps incentivize that moment where people think about whether or not it鈥檚 worth buying, or if it is something that they want as a treat,鈥� she said. 鈥淣othing would prevent them from doing that. Then we鈥檒l get the revenue to be able to support school meals for children and child care scholarships for those who need them.鈥�
Gov. Wes Moore (D) and the General Assembly are looking to tame a $3 billion projected budget deficit. Added to that are concerns about cuts to programs, and a proposed freeze on child care subsidies. Moore and lawmakers are also worried about the threat of cuts to federal aid. Those cuts could add hundreds of millions 鈥� perhaps billions in a worst-case scenario 鈥� to the budget problem.
The bill has the backing of the American Heart Association.
Laura Hale, a lobbyist for the association, said the Philadelphia tax has been 鈥渁n amazing benefit for public health, as well as for investments in the city. They鈥檝e actually gained jobs because they invested in early child care. Having that permanent funding has made a huge difference.鈥�
鈥淭his can be a creative solution to make sure that we鈥檙e protecting and taking care of Marylanders during these times,鈥� Hale said.
The proposal has drawn the ire of the soft drink industry.
鈥淎 beverage tax would raise prices dramatically on everyday grocery items at a time when Marylanders are already struggling to afford higher costs for necessities from food to housing to utility bills,鈥� according to a statement from the Maryland-Delaware-DC Beverage Association. 鈥淭here could not be a worse time to burden working families and small businesses with yet another expense that hurts those who can least afford it the hardest.
鈥淭here are better ways to fund budget priorities than imposing a new tax on top of the state鈥檚 6% sales tax, raising prices as much as 60% on some beverages,鈥� the statement said.
