FY2010 House 1 Budget Recommendation:
Policy Brief
Deval L. Patrick, Governor
Timothy P. Murray, Lt. Governor
The Administration is dedicated to ensuring the highest quality of health and wellness for each of the Commonwealth's residents. Individual wellness is determined partly by healthy lifestyles and healthy choices; the Commonwealth's Mass in Motion initiative is dedicated to providing information and support for each Massachusetts resident to make healthy choices for themselves. The Massachusetts Department of Public Health has partnered with all of the state's major health funding foundations to provide grants to cities and towns to make wellness a priority at the local level. Among other efforts of Mass in Motion, large state-operated facilities will be required to comply with nutritional guidelines in their menu offerings, employers will be offered assistance in establishing workplace wellness programs and calories will be posted on the menus of franchise restaurants.
In order to encourage healthy choices and support critical programs that target the wellness of each Massachusetts resident, the current 5% sales tax exemption on alcohol, sweetened beverages, including soda, juice, and sports drinks and candy will be removed. Evidence-supported data has shown that each of these products serve more as a detriment than a benefit on the health and wellbeing of an individual. Net proceeds from these removed exemptions will be directly deposited into the Commonwealth Wellness Fund, and will support critical public health programs such as alcohol and tobacco addiction services, childhood health and nutrition promotion, violence prevention and workforce wellness services. Essential food items will continue to qualify for the sales tax exemption.
Removing the sales tax exemption on the purchase of alcohol for off-site consumption can have a profound effect in reducing harmful alcohol use and its consequences, particularly by underage drinkers[1]. While we have made significant progress, Massachusetts still ranks in the top 10% of states with the highest rates of both underage drinking and adult binge drinking.
Historical evidence and research indicates that removing the tax exemption on alcohol has a direct public health impact[2]. The relationship between age at first drink and the risk of developing alcohol related disorders during adulthood is greatest when the age of first drink occurs before the age of 15. Numerous studies show that youth are very sensitive to even small price increases. Ending the exemption will decrease underage consumption and frequency of use. It may also delay the first use of alcohol for some teenagers.
The benefits of removing the tax exemption on alcohol are not limited to young people. Studies have also shown that increasing the price of alcohol decreases drinking and driving among all age groups and reduces the rates of violence and traffic fatalities.
Childhood obesity is a critical public health crisis that must be addressed through thoughtful public policy. More than half of adults and nearly one in three high school and middle school students are overweight or obese. Consequently, the percentage of adults in Massachusetts with Type 2 diabetes has nearly doubled in the last decade. Diabetes not only causes serious illness and premature death, it also is costly (requiring $3.4 billion a year, 7% of our entire state health care costs).
Consumption of candy and soda is on the rise. Per capita candy consumption increased steadily since the mid-1980s. Candy, soft-drink and other sweetened beverages add significant non-nutritional calories to the diets of Americans and are directly linked to obesity, especially among children[3]. Children and adults who consume such foods have less appetite for healthier foods at meal time, creating a vicious cycle of calorie intake and nutritional deficiencies. Removing the tax exemption for the purchase of sweetened soda and candy is a critical first step in discouraging the consumption of these empty calories. In ending this exemption, the Commonwealth will join seventeen other states that tax foods of low nutritional value.
It is a priority of this Administration to create and sustain intelligent policies that support healthy choices. The "Mass in Motion" initiative will assist residents and families through information provision regarding weight management and healthy lifestyle choices to encourage healthy decision making. These two efforts will work in concert to mitigate the devastating effects of childhood obesity on children and families.
In addition to posting calorie information on the menu boards of chain restaurants and providing parents with the Body Mass Index number of their children, Massachusetts will support various other nutrition and wellness programs via the revenue collected by lifting the sales tax exemption on sweetened beverages and soda. These revenues are critical to mitigate deeper budgetary reductions in Wellness accounts within the Department of Public Health.
Massachusetts joins 17 other states in this effort to promote public health and minimize the escalating costs associated with obesity.
| Regional States | |
|---|---|
| Maine | 5.5% sales tax on snack foods, soda, ice cream and toaster pastries |
| New Jersey | 6% sales tax on candy and soda |
| New York | 7.5% sales tax on candy and sweetened beverages with less than 70% natural fruit juices |
| Rhode Island | 4 cent tax per case on soda, mineral water and beer |
| Other States | |
| Arkansas | 21 cent tax per gallon of liquid soda and $2 tax per gallon of soda syrup |
| California | 7.25% sales tax on soda |
| District of Columbia | 5.75% sales tax on snack foods and soda |
| Illinois | 6.25% sales tax on soda |
| Indiana | 5% sales tax on candy, gum, soda and bottled water |
| Kentucky | 6% sales tax on candy, gum and soda |
| Minnesota | 6.5% sales tax on candy, soda, fruit drinks without real fruit juice and gum |
| Missouri | .3 cent tax per gallon of soda |
| North Dakota | 5% sales tax on candy, gum, sweetened beverages <70% fruit juice and powdered drink mixes |
| Tennessee | 1.9% of gross receipts from soda and soda ingredients paid by manufacturers and bottlers |
| Texas | 6.25% sales tax on soda, diluted juices and candy |
Massachusetts has long been a leader in innovation in health care and public health. The myriad public health programs that serve the people of the Commonwealth reflect the Administration's commitment to preventative care and wellness services as a vital component of health care reform. $121.5M of net revenue generated from eliminating exemptions on sweetened beverages, candy, and alcohol will be dedicated to a new Commonwealth Wellness Fund. Two accounts will be partially funded from the Wellness Fund, specifically:
A) Addiction and Tobacco Control Services (86% funded from Wellness Fund)
B) Health Promotion, Violence Prevention and Workforce Expansion (87% funded from Wellness Fund).
| $121.5 Million | ||
| Account Distribution | % Wellness Fund | Total Wellness Fund Spend |
|---|---|---|
| Additional and Tobacco Control Services | 86% | $78,000,000 |
| Health Promotion, Violence Prevention and Workforce Expansion | 87% | $43,500,000 |
| Total Wellness Fund Spending | $121,500,000 | |
Within these accounts, proceeds from the removal of the tax exemptions on alcohol, sweetened beverages and candy will be dedicated to critical substance abuse prevention and step down services within high-risk communities, child and adolescent health programs, teenage pregnancy prevention, domestic violence and sexual assault prevention and several other critical programs that support the wellness of Massachusetts residents.
Further Information about the Mass in Motion Initiative can be found on the website,
http://www.mass.gov/massinmotion/.
[1] Coalition for Addiction Services. The problem of addiction in Massachusetts. December 2008.
[2] American Journal of Public Health.Tax Increases Result in Lower Alcohol-related Mortality. 17 November 2008.
[3] Associated Press. Scientists Target Soda as Main Cause of Obesity. 6 March 2006.
Prepared by the Executive Office for Administration and Finance · Rooms 373 & 272 · State House
For more information contact:
Kelly Driscoll (kelly.driscoll@state.ma.us)
www.mass.gov/budget/governor