Some Maryland lawmakers want to tax sugary beverages. Businesses aren't so sweet on it

Yahoo

07-03-2025

BALTIMORE — In an effort to address Maryland's growing budget deficit, two Democratic lawmakers are considering a tax on sugary beverage distributors — a proposal that has sparked controversy among Republicans and retailers.
House Bill 1469, sponsored by Montgomery County Delegate Emily Shetty and Delegate Joseline Peña-Melnyk, who represents Prince George's and Anne Arundel counties, would add a 2-cent-per-ounce excise tax on the distributors of sugary beverages, powders or syrups.
Revenue from the proposed sugary beverage distributor tax is projected to generate $500 million in fiscal 2027, nearly half of which would be distributed to funds for healthy school meals and child care scholarships. Most of the remaining portion would go to the state's general fund, though a new amendment could provide a health equity fund with about $15 million.
'This bill is a public health bill,' Shetty said at a House Ways and Means Committee hearing on Thursday. 'It will decrease consumption of sweetened beverages while investing in universal school meals for children, boosting our child care scholarship program and making a sizable dent in our structural budget deficit.'
Under the bill, a sugary beverage is defined as a drink that contains added sugars or artificial sweeteners. It does not include natural fruit or vegetable juices, milk, infant formula, beverages for medical use or alcoholic beverages.
At the bill's hearing, House Republicans raised numerous questions about the proposed tax. However, they have also balked at additional tax proposals as a whole.
In a statement Thursday, House Republicans called the bill a 'Slush Tax.'
'The Democratic leadership feels morally justified to move forward with sweeping tax increases, and unfortunately, Maryland's families and small businesses will not know what hit them,' said House Minority Whip Jesse Pippy, who represents Carroll and Frederick counties.
Distributors or retailers would not have to pass the entire 2-cents-per-ounce tax on to consumers, Shetty said.
'But if they do pass it on, it will give that opportunity for that point of reflection in the consumer aisle, or by the consumer, rather, that will say, is this a treat or is this something that I need for daily consumption?' she said.
Proponents pointed to the health benefits of reducing sugar consumption, which could include lower rates of childhood obesity and heart disease, among other things.
Ricarra Jones, political action chair for the Maryland State Conference of the NAACP, said the legislation also could have a positive impact on communities of color, which have long been targeted by sugary drink advertising and plagued with resulting health issues.
'I believe that this is intentional,' she said of the targeted promotions. 'There is a deliberate lack of healthy options in our corner stores and our grocery stores. Our kids and our families deserve to walk in a store just like any other family in this state and be able to choose water and other healthy drinks.'
Maryland would be the first state to levy such a tax, though some cities, including Washington, D.C., Philadelphia and Seattle, already have taxes on sweetened beverages.
Marisa Waxman served as Philadelphia's first deputy revenue commissioner when the city implemented its sweetened beverage tax in 2017. From the outset, she said, concerns were raised about the tax being difficult to implement, causing job losses or failing to generate adequate revenue. Those concerns did not materialize though.
'From a fiscal standpoint, all taxes have some impact on underlying activity, and new taxes can be difficult to predict. Even with these challenges, the Philadelphia beverage tax has been a reliable source of revenue,' she said.
The city's tax generated about $78 million in its first full year and has remained 'relatively stable' since then, Waxman added, saying it's one of Philadelphia's 'most accurately predicted revenue streams.'
Opponents, however, argued that the proposed tax was anti-business and could prompt some Marylanders to drive to different jurisdictions to purchase sugary beverages instead.
Sarah Price, vice president of communications and government affairs for the Maryland Retailers Alliance, said the sugary beverage distributor tax, as well as other bills up for deliberation by the legislature, don't present Maryland as an 'economically viable option for expansion.'
'This bill would not only incentivize customers to leave the state to shop but also disincentivizes businesses from investing here when they know that they can make more and save more money by locating directly across the border in our neighboring states,' she said.
Marshall Klein, president of Klein ShopRite of Maryland, which owns and operates nine grocery stores in Baltimore City, Baltimore County and Harford County, said Shetty's legislation was not a soda bill — it's a tax on people who don't have other options.
'This is a group of progressive legislators trying to get a revenue option and tell people what they should and what they shouldn't drink and how they should and how they shouldn't live,' he said. 'And what that's going to do is take money out of the mouths of these families and impact their ability to continue to shop and provide for their families by purchasing other healthy foods.'
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