Gov. David Ige has proposed a new 2-cents-per-ounce tax on soda and other sugary drinks in an effort to discourage sugar consumption and cope with the “huge health challenge” of obesity and diabetes.

An administration analysis attached to House Bill 994 and Senate Bill 1148 indicates the measures could also raise $60 million a year or more at a time when the drop in tax collections during the pandemic has left the state alarmingly short of cash for the next two years.

However, House Speaker Scott Saiki said it appears the new tax won’t be needed to cover the state’s budget shortfall, and he said the Legislature is unlikely to approve it.

Opening Day of 2020 Legislature Speaker of the House Scott Saiki.
House Speaker Scott Saiki in 2020. Saiki said he doubts the sugar tax bill will pass. Cory Lum/Civil Beat/2020

“The sugar tax is a difficult tax because it is broad based, and it will probably impact lower-income people more than others, so the prognosis for enactment is not very good,” Saiki said.

Senate Ways and Means Chairman Donovan Dela Cruz also has doubts about the bill, pointing out the soda tax and similar ideas failed to win approval from the Senate Health Committee in years past, including a soda tax proposed by former Gov. Neil Abercrombie’s administration in 2011.

Dela Cruz said in a written comment he is not sure if sentiment in the Senate has changed since then.

Ige told reporters this week the idea is to reduce sales of sugary beverages, and he said sugar taxes in other jurisdictions “have really changed sugary beverage consumption.”

The bill cites a 2017 study conducted by the Harvard T.H. Chan School of Public Health and the state Department of Health that concluded a 2-cent-per-ounce tax would result in fewer cases of obesity, fewer deaths and save $59 million in health care costs over 10 years.

“The consumption of sugar-sweetened beverages is linked to serious health problems, including but not limited to weight  gain, obesity, pre-diabetes, diabetes, tooth decay, heart disease, and other health problems,” according to the bill. “In Hawaii, one out of four middle and high school youth and more than half of adults are overweight or obese.”

Governor David Ige removes his mask before speaking at the contact tracing press conference held at the Hawaii Convention Center. August 19, 2020
Gov. David Ige said his administration is proposing the sugar tax to try to reduce the number of cases of obesity and diabetes. Cory Lum/Civil Beat/2020

All of the revenue from the new tax would be deposited into the “Healthy Ohana Fund.”

An unspecified fraction of the money in the fund would be spent by the state Department of Health on chronic disease prevention programs.

The fund would also finance a nonprofit that would launch new programs to prevent obesity and chronic diseases, including nutritional, active living and farm-to-school agricultural programs.

The justification attached to the sugar tax bill contends that the fee “is an innovative way to improve the health of Hawaii’s keiki and families, reduce healthcare costs, and fund comprehensive programs that support access to healthy food, physical activity and chronic disease prevention.”

No hearing has been scheduled yet for the bill.

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