Texas Legislator Calls for Beverage Tax

Rep. Joe Farias (D-San Antonio) has proposed a bill (H.B. 779) that would
impose a statewide penny-per-ounce tax on soft drinks, particular sweetened
beverages and the powders and syrups used to make them. The tax would
increase each year by the same percentage as the “most recent annual
revised Consumer Price Index for All Urban Consumers.” The legislation,
which purportedly aims to fight obesity and supplement funding for health
programs in public elementary and secondary schools, calls for 80 percent of
the tax revenue collected to go to the Texas Education Agency and 20 percent
to the Department of State Health Services.

The proposed tax would apply to all nonalcoholic, carbonated and noncarbonated beverages and mixes that contain natural or artificial sweeteners. Exceptions to the tax would be certain sports drinks, 100 percent fruit and vegetable juices, infant formula, milk products, and beverages containing sweeteners that do not add calories. Water, coffee and tea without caloric additives would be exempt as well. Those who sell or import the beverages into the state for sale would be required to pay the tax each month and file a report with the state controller’s office detailing their sales and import figures. They would also be required to obtain an annual permit to sell the beverages. If enacted, the bill would impose a 50 percent penalty on those who fail to pay the tax or fail to file a report with the controller. Violations of the proposed bill would be considered a Class C misdemeanor.

This is apparently the second time Farias has tried to tax soft drink sales in
Texas. He filed a similar bill in March 2011 that failed to pass. If enacted, the
legislation would take effect September 1, 2013. See Courthouse News Service,
January 31, 2013.