Obama Supports "Sin" Tax on Coca-Cola and Pepsi
By Nicholas Johnston
September 8, 2009

Sept. 8 (Bloomberg) -- President Barack Obama said he is willing to consider taxing soda and other sugary drinks as Congress debates overhauling the U.S. health-care system.

"I actually think it's an idea that we should be exploring," Obama said in an interview with Men's Health magazine that goes on sale next week. "There's no doubt that our kids drink way too much soda."

Lawmakers drafting legislation to revamp the U.S. health- care system have considered new taxes on sugar and sweetened soda to help pay the cost, estimated at as much as $1 trillion over the next decade.

Obama said that while the proposal faces opposition from some legislators, higher taxes that reduce soda consumption would be helpful in holding down health-care costs.

"Every study that's been done about obesity shows that there is a high correlation between soda consumption and obesity," Obama said in the magazine interview. "Obviously it's not the only factor, but it is a major factor."

Trade association lobbyists working for companies including Coca-Cola Co., PepsiCo Inc., Cargill Inc. and Archer Daniels Midland Co. have worked to kill the proposal, which has been debated by the Senate Finance Committee.

Lobbying Groups

The American Beverage Association, a Washington lobbying group for Atlanta-based Coca-Cola, Purchase, New York-based PepsiCo and other non-alcoholic beverage makers, plans to continue to fight efforts to levy soda taxes, spokesman Kevin Keane said.

"A vast majority of Americans have heartburn when the government uses the tax code to tell them what to consume," Keane said. "We're going to remain vigilant."

The Corn Refiners Association, a Washington lobbying group for companies including Minneapolis-based Cargill and Decatur, Illinois-based Archer Daniels Midland, didn't immediately respond to a request for comment.

The five-member S&P 500 Soft Drinks Index rose 1.1 percent today. The index is up 12.3 percent since the beginning of the year.

Obama said he understands fears that some would have about "Big Brother telling them what to eat or drink." Still, he said, any steps that reduce soda consumption would have "a big impact on people's health in this country."

Government moves discouraging soft-drink use would hit companies already suffering from sliding sales and prices. Soft- drink sales volume fell 3 percent in 2008, dropping for the fourth straight year, according to Beverage Digest, an industry newsletter.

The Congressional Budget Office has estimated that a 3-cent tax on 12-ounce cans of soda would raise $50 billion over a decade.

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