Reporting from Washington — After successfully quashing discussion of a federal tax on soft drinks last year, Coca-Cola Co., PepsiCo Inc. and the fast-food industry are facing a new battle on the state level, where legislators are beginning to consider their own taxes on sweetened beverages.
The next showdown could be in California, where legislators last week pledged to pass such a tax in light of new studies linking soft drink consumption to obesity in children and adults. One study suggests that obesity and related problems cost California alone $41 billion a year in medical expenses and reduced productivity.
In the last year, proposals to alter the tax treatment of soft drinks have surfaced in 12 states, including a bill that recently passed the Colorado Legislature. The city of Chicago currently taxes soft drink sales.
In Washington, D.C., the industry spent at least $18 million on lobbying and millions more in campaign donations to key officials, derailing any discussion of taxing soft drinks as a means of helping fund a federal healthcare overhaul. The industry also partnered with community and minority groups to oppose a federal tax, based on the argument that a tax on sodas would disproportionately affect poor people.
But the industry's strategy has begun to fray. One of the most prominent organizations, the National Hispanic Medical Assn., has dropped its alliance with the industry, and the California affiliates of two other groups have split from their parent organizations and are considering support for taxes on sweetened soft drinks.
Nonetheless, Kevin Keane, a senior vice president for the American Beverage Assn., called the tax idea a "money grab" that would hurt working families. "Congress understood that a consumer tax would only add to their pain, not help it," he said.
When California Senate Majority Leader Dean Florez (D-Shafter) introduced his soda tax bill, he said one penny of tax per teaspoon of added sugar in any sweetened beverage would generate as much as $1.5 billion each year. That money would pay for parks, recreation and school health programs, Florez said.
"The Legislature is primed for this bill," Florez said, adding that he expects bipartisan support.
Industry officials say they are voluntarily taking steps to discourage soda overconsumption. For example, the American Beverage Assn. worked closely with First Lady Michelle Obama's "Let's Move" campaign and pledged to prominently display nutrition information on drink containers and vending machines.
"There is no industry in America that has stepped up to do its share to address a complex societal problem like childhood obesity more than the beverage industry," Keane said.
That argument angers public health advocates such as Harold Goldstein, head of the nonpartisan California Center for Public Health Advocacy, which helped Florez craft his bill.
Goldstein sees the beverage industry's voluntary measures as part of "a concerted effort to undermine discussions across the country" about taxing soda. And he was highly critical of the industry outreach to minority groups that suffer most from obesity.
In California, the state affiliate of the League of United Latin American Citizens this weekend will consider a resolution urging its national assembly to leave the coalition that opposes the tax.
The California chapter of the American Academy of Family Physicians has asked the national organization to end its relationship with Coke, which last year paid the group a sum "in the high six figures" to publish educational materials on its website relating to consumption of added sugar. The California chapter offered $100,000 to the national organization to help defray the loss of funds.
But Dr. Douglas E. Henley, the national academy's chief executive, said the group saw no need to end the partnership.
"We were, to put it mildly, enraged," said Dr. William Walker, a family practitioner and head of Contra Costa Health Services in Northern California, who quit the academy in protest.
Henley stressed that there is a "firewall" to protect the materials from interference by Coke. Some nutrition experts who have reviewed the materials on the academy site criticized them as overly friendly to the industry's viewpoint.
Though the national organization has not taken a position on taxing soda, the California chapter this month called on Gov. Arnold Schwarzenegger and the state Legislature to impose a soda tax rather than cut state-funded health programs.