Senator Blessing Issues Statement on Resolution to Repeal Ban on Food and Beverage Excise Taxes

COLUMBUS—Senator Louis W. Blessing, III (R-Colerain Township)  issued the following statement regarding Senate Joint Resolution 9 to repeal Ohio's ban on food and beverage excise taxes:

"I’m introducing SJR 9 to remedy a situation that, as time has passed, has proven to be a mistake. This resolution will undo a successful ballot initiative from 1994 that banned excise taxes on food and non-alcoholic beverages in Ohio. That initiative passed handily, so why would I want to undo it? Much has changed since then and, if we are serious about reducing obesity and creating a healthier state, then undoing this amendment should be at the top of our list.

Ohio has been struggling with obesity, and it’s even worse with children. We are at least the 12th worst state in terms of adult obesity; we’re 6th for child obesity. These numbers are particularly alarming given that obesity is second only to smoking in terms of preventable death. Like smoking, it is also severely straining our healthcare system. For the state, it also means that we’re spending significantly more on Medicaid, which is our largest expenditure when federal dollars are included.
         
The reason that SJR 9 is part of the answer is that it allows economics to help fix the problem. Excise taxes are levied at the wholesale level and, unlike sales taxes, are reflected in the shelf price. This is how taxes on cigarettes and beer work. There is a large body of research from the economics community that has demonstrated that excise taxes on “sin” items like cigarettes are, in fact, Pigouvian taxes: not only do they raise revenue, but they also dissuade people from making a choice. In other words, if the price per pack of cigarettes is high, then at least some people will choose not to partake or simply quit. There are obviously other considerations – a tax being too high leading to illicit markets – however, excise taxes are a tool that can be used to discourage bad behavior.
         
Suppose SJR 9 were to pass, what would this mean? Likely nothing, unless the General Assembly were to act. It’s possible that some excise taxes are still on the books that ended when the constitutional amendment passed, but would come back into play if it were repealed. However, broadly speaking the General Assembly would have to pass legislation to enact these excise taxes and determine what the state wants to incentivize or not.
         
Where I would like to go with this is where former Governor Voinovich went: a modest, per-ounce, sugary drink excise tax. In 1994, it was a penny per ounce. Doing something similar would generate hundreds of millions of dollars for the state, which could then be used to shore up expenditures like Medicaid. This ensures that a sugary drink tax is not regressive in the sense that it’s being used to bolster a program that low-income Ohioans rely upon. It could also be used to help our food banks, which have a focus on nutritious and healthy food. They are under significant strain, as the middle class in Ohio is increasingly using them. SNAP, WIC, and Produce Perks are other options. The possibilities are seemingly endless.
         
The best part is that Medicaid would actually become cheaper. How could this be? Again, some Ohioans would choose to give up sugary drinks, or save them for special occasions, and this change in behavior can only reduce obesity in Ohio, thus relieving the strain on our healthcare system as well as Medicaid. Subsidizing healthy food options for low and middle income Ohioans, while simultaneously reducing healthcare costs, is simply good economics, as well as being the right thing to do.
         
This may not be a silver bullet, but it will most certainly move the ball in the right direction, and will almost certainly garner bipartisan support. It is my hope that we can recognize taxes for what they are: tools to facilitate the needs of a healthy political economy."

###