Soda tax shelved

State legislators soured on a proposed excise tax on sugared beverages that the governor”™s office estimated would sweeten the state”™s revenue haul by nearly $1.5 billion over two years.

Gov. David Paterson”™s so-called soda tax was not included in the state Legislature”™s recently adopted 2010 budget. It was a second defeat on the revenue-raiser for Paterson, whose soda-tax proposal in 2009 also fizzled in Albany”™s legislative chambers.

The governor and supporters of the 2010 tax called it a measure to curb obesity and the state”™s high public-health costs for obesity-related health problems. Paterson said revenue from the tax on producers of beverages containing more than 10 calories per eight ounces would be dedicated to health care spending. The tax was expected to raise an estimated $465 million in revenue this year and $1 billion in 2011.

The CEO of the American Beverage Association, whose members include Purchase-based Pepsico Inc., called the measure “a money grab, pure and simple,” and said it would be ineffective at lowering the state”™s obesity rate.

The beverage industry, business groups and labor unions in the Hudson Valley lobbied against the tax as a jobs-killer and an added business cost that could drive Pepsico Inc. to relocate its corporate headquarters and bottling operations from Westchester and the state. Brian O”™Byrne, CEO at Hydrive Energy L.L.C., whose energy drinks stood to be taxed, said the proposed levy would cause a 10-percent decline in overall soft-drink sales in the state.

Visiting Westchester in March to stump for his executive budget, Paterson met privately with Coca-Cola and Pepsi bottlers and union officials opposed to the tax. He publicly agreed the soda tax could cut into profits and jobs in the industry. But unless someone had another $1 billion revenue source for a state facing a $9 billion deficit, it would stay in his budget plan, he said.

Legislative leaders last spring suggested the soda tax had gone flat, though Paterson did not back away from his proposal.

“Any time the state is looking for new revenue, it”™s always on the table,” said Paul Vitale, vice president of government and community relations at The Business Council of Westchester. The Business Council joined in a regional coalition of business groups to oppose the tax.  “We”™re gratified to see this wasn”™t passed,” he said.

Vitale said the adopted budget includes $1.5 billion in raised taxes and fees but no cap on property taxes and “very little” to spur economic development and jobs creation. As for the soda-tax defeat, “This at least sent the signal to Pepsico that it wasn”™t going through and (would not) hurt them even more,” he said.