MARYLAND - A proposed Maryland bill is aiming for a pop in state revenue through a new tax on sugary drinks, powders, and syrups.
HB1469, dubbed the Sugary Beverage Distributor Tax or the For Our Kids Act, was introduced this month in the State’s General Assembly with the goal of raising almost $500 million in taxes a year. If passed, the law would initially stick a 2-cent-per-ounce tax on sugary beverages, syrups and powders for distributors.
The tax would not apply to natural fruit or vegetable juice, milk, infant formula, or beverages for medical use. Sodas, energy drinks, and sports drinks would all fall under the new levy.
Those subject to the tax would include manufacturers or wholesale dealers who sell to retailers in Maryland or offer those products for sale to consumers.
According to the bill, the funds raised from the proposed tax would be used to provide school meals to Maryland children through a dedicated fund, with interest earned on that fund going to the state’s general coffers. Maryland lawmakers are currently scrambling to address a nearly $3 billion deficit, with various budget cuts possibly on the table.
Still, an increase in taxes is likely to face significant pushback as Marylanders grapple with increasing inflation costs. Though the tax is aimed specifically at distributors, some fear that cost would inevitably be passed on to the consumer.
"A lot of the businesses, around here especially, can't take a loss like that on these percentages and it's very fine margins here," said Chareles Heise with Pizza Tugos and Liquor Depot in West Ocean City.
At Adam's Taphouse Grille in Fruitland, a soda costs $3.95. If the For Our Kids Act passes, owner Peter Roskovich expects that price to increase.
"That's a 16-ounce cup, so now I got to go 32 cents higher, I'm at a $4.50 soda," said Roskovich. "I mean that's not even extra money in my pocket, that's just breakeven."
Roskovich said increased costs might not show up on receipts immediately, but it would happen eventually.
"We can't suck up the cost, I mean we can go up a little bit, every year they raise prices, 5% on soda, 5% on beer, every year, and we don't always move but at some point you have to move up a little bit," said Roskovich.
If passed, the new tax would take effect July 1, 2025. That 2-cent-per-ounce tax rate would then increase on July 1, 2027, and then each year after that based on inflation, according to the proposed legislation.
Some health advocates have called for similar taxation of sugary drinks, citing the decrease in consumption with higher prices.
Boulder, Oakland, Philadelphia, Seattle, and San Francisco are all U.S. cities where a similar tax has been implemented. Maryland would be the first to adopt one statewide.
The bill is currently slated for a hearing in the Maryland House Ways and Means Committee on March 6, 2025.
