METHOD OF COLLECTING THESE TAXES

Now, there are two possible ways of collecting these revenues. One would be through taxing at the source, that is, through taxing the wholesalers who bring these products into the city or producers who mass produce any of them in the city alone. I am not sure that there are too many of them. The way West Virginia handled this is, it saysI am quoting here from Prevention Magazine, "The target is health", and on page my page is missing- I guess it is about 24-"The West Virginia tax is typical and exemplary. It's levied at the rate of one cent on each 16-ounce (or fraction thereof) container of soft drink and 5% of a cent per ounce of syrup used to make sodas. Powders used to make syrups are taxed at the rate of five cents per ounce, while powders used to make drinks-like Kool-Aid-are taxed at the rate of one cent per ounce. (Kool-Aid and most fruit-flavored drinks are just as bad as soft drinks. They're sugar solutions with little or no nutritional value.) The tax is paid by the bottler, but passed on to the retailer and subsequently to the consumer."

Now, that would be taxing of the source. The other possibility would be taxing at the retail outfits. This would have the advantage of making the public aware that the products they are spending their money on really don't have very much value, and therefore aren't considered worthy of taxation, just as they are aware that cigarettes and liquor fall in this category.

Now, I am not saying which would be the best way. I think that there are other people who would know much more about this than our group would.

I also have a lot of material here which explains exactly how sugar is harmful, and how it affects the body, how it brings about such things as diabetes, heart disease, and other related illnesses, and similar material of the sort. So if you want any clarification in that area, I do have the material.

(The statement of Mrs. Aikin referred to follows:)

HEALTH ACTION COMMITTEE MRS. LEE AIKIN

NOTES-PROPOSAL FOR A TAX ON SODA POP, SUGAR AND OTHER
UNHEALTHFUL PRODUCTS

1. Tax on Soda Pop, Sugar Syrups and Sugar Powder for Syrups & Drinks. Precedents: S. Carolina 1930's, Louisiana 1936, W. Virginia 1951, N. Carolina

1969.

W. Virginia raised over 5.5 million in 1971, used for state medical school. Their population is 1,700.000. D.C. with 800,000 plus daytime influx should be able to raise at least $3 million.

2. Tax on other products that are extremely unhealthy, used excessively, or primarily by children.

Candy-5% 4 or 5 tsp. sugar per oz.

Chewing gum-5% (the sugared kinds)
Sugar-2¢ per lb.

Jams and Jellies-5% 1 tsp. per tsp.

Candied cereal-5% (with 40% or more sugar by weight or sugar first). Chocolate milk-5% (6 tsp. sugar per glass, cocoa makes calcium useless). 3. Tax on other products containing considerable amounts of sugar or other dangerous substances.

Cakes, pies and cookies (not baked in individual bakeries) pies 10-14 tsp. sugar per piece.

Ice cream.

Tea.

Refined white flour, white bread, macaroni, etc.-1¢ per lb.

White rice-1¢ per lb.

Processed meats containing nitrites & nitrates (nitrates have caused infant deaths, meats also contain other questionable additives).

Gelatin desserts 4 tsp. sugar per 1⁄2 cup, too high in glycine, incomplete and unbalanced protein.

4. Tax on advertising of the above-mentioned undesirable products.

Taxes 2 through 4 could probably raise from 10 to 20 million dollars. Any excess over the teachers' requirements could be used to pay for D.C. health and dental services and education.

Taxing could be direct or indirect.

Taxing at the source, i.e., wholesalers and producers would be most efficient. Taxing at retail outlets would have the advantage of making the public aware of the lack of value of the products they are buying.

Mrs. AIKIN. When I am through testifying I would like Mr. Aikin, who is a school teacher in the District, and who is a member of our group, to testify with regard to his experience with sugar in the classroom, and the bad effects that it has on the behavior and the well being of the students in the class.

Mr. CABELL. Mrs. Aikin, I am sorry to inform you that it will not be possible to hear any further witnesses today, because we have already run over our time. And many members of the committee, including the Chair, have appointments immediately for which we are late now. Without objection, however, Mr. Aikin is certainly privileged to submit a statement for the record.

I want to thank you for your very interesting and enlightening testimony. And I cannot argue with you on your statements and precepts. The Chair is constrained, however, to mention the fact that this committee is not set up or qualified to pass on dietary matters where they are in as much controversy as some of the items which you have criticized. Neither is this committee in a position to exercise influence on the dietary habits of the nation, or of the District, by proscribing certain elements in our diet that have been historical. And certainly we do not have the ability, nor would we be able to get across on the floor of the House, any action from this committee that would have the very radical changes in dietary habits you suggest, by singling out those and creating a situation of prohibition through taxation. I think that you run into some constitutional questions there that would be extremely difficult.

Again, may I say that I think that your testimony has been most interesting. And I cannot argue with a single assumption that you have made. But I do not think that it is within the authority or the prerogatives of this committee to accept them at face value, to the extent that we would seek a prohibition of them through taxation, and by singling out those products and those elements as a matter of taxation. All of those, or most of them, are now subject to some form of sales tax. And the increases in sales taxes would, of course, apply to them also. But it is the opinion of the Chair that we would be treading on extremely dangerous grounds by trying to adopt that as a policy of this committee, and pursuing the prohibition or the banning of these food products under the guise of creating revenues. Mrs. AIKIN. May I say something?

Mr. CABELL. Yes.

Mrs. AIKIN. First of all, the reason I broke this down into four categories was because I realized that some of them would be less likely

to be seriously considered than others. My basic emphasis is on point. 1, which is the tax on soda pop, which is already in effect in several states, probably several of whom in addition to have regular sales

taxes.

Secondly, perhaps a couple of the products in number 2, that alone would be enough to cover the whole teachers pay raise bill.

And thirdly, I am not suggesting prohibition, because I think the best way to make people want something even more is to prohibit it. And I think that the point that I suggested under two, such as 5 percent, are not what you would call a penalty type tax, such as the 50 percent or more tax on liquor is. But basically my chief emphasis is on point number 1, which is a tax that has been popular in several other states, and would cover at least half of the necessary expenses under the teachers pay raise bill.

Mr. CABELL. Certainly your testimony will be given full consideration in the markup discussions and any discussions that the committee will hold before we arrive at any fixed bill.

We appreciate your coming before us.

Mr. Fauntroy, any questions?

Mr. FAUNTROY. Yes.

I would just like to say that I certainly would take very seriously your recommendations. We do have excise taxes on special products which are generally considered luxuries. And until your testimony, I had thought that soda pop and sugar was a luxury. And for that reason I want you, if you will, to submit to me the nutritional information that may help me to stop buying soda pop and strawberry shortcake and other items which apparently are detrimental. And quite seriously, I certainly will be looking into this very carefully. And I would hope that if it is not too much trouble to you, and what staff you may have available—

Mrs. AIKIN. We have none whatsoever. I am full time employed at another job, and do this strictly in my free time.

Mr. FAUNTROY. I may wish to talk to some of the members of the District of Columbia staff who might suggest to you for the record, for submission for the record, what such a tax increase on these items might yield, given our past year's sales taxes on these items.

Mrs. AIKIN. I would like to say, I don't have too much information with regard to actual tax yield, because taxation is not my area of specialization. Science and nutrition is. Perhaps you might know of somebody who would work with me on this.

Mr. FAUNTROY. Mr. Kenneth Back might be a good man to comment on this.

Is Ken here?

No, he is not here.

Mrs. AIKIN. Is he a staff member of yours?

Mr. FAUNTROY. No, he is the Finance Officer of the District of Columbia, and has access to all those records.

Thank you, Mr. Chairman.

Mr. CABELL. Mr. Gude?

Mr. GUDE. Thank you, Mr. Chairman.

I know my youngest daughter is going to be very alarmed when she hears about this testimony.

First off, Mrs. Aikin, I certainly want to commend you, the first time you have ever testified before the committee, for the very comprehensive way you have set forth your argument and presented your testimony, I certainly want to commend you. I think you are going to go a long way in the lobbying field.

I am surprised that there is a tax on soda pop in West Virginia. I am also surprised at the tax in Louisiana, it being a sugar producing state that is in that business. Was this per se, do you know, a tax aimed at sugar with the concept that it was detrimental on the teeth, or was it merely used as a source of funds? I note this has been proposed in the State of Maryland and other jurisdictions.

Mrs. AIKIN. I don't have any information on any of the states except West Virginia, but the tax in West Virginia is used to support their state medical school, West Virginia University Medical Center. Mr. GUDE. It is earmarked-an earmarked fund?

Mrs. AIKIN. It is an earmarked fund, that is right.

Now, to quote here from this article: "Probably the best thing about West Virginia's soft drink tax is the use of the funds-the construction, maintenance and upkeep of West Virginia University's medical college in Morgantown, Which offers four-year programs in medicine dentistry and nursing. This is one of the most palatable taxes in the state of West Virginia,' says assistant excise and license taxes director Henry D. Mercer, 'because the people can see where their money is going. An even better use for such funds might be nutrition research and education. Or for dental and medical facilities to treat the nutrition-related maladies soda-drinkers are subject to."

But with regard to exactly the purpose of the tax in these states beyond raising revenues, that I don't know, but I am interested in finding out myself, and had planned to do some more research on that.

Mr. GUDE. It would appear, because West Virginia did earmark this for the state medical school, they thought there was some correlation between the products and the use to which the funds were going.

In the debate that we had on the floor on cyclamates the point was raised by the procyclamate people that sugar indeed, the consumption of sugar-which has increased so drastically in this country and all around the world in the last number of decades-that some medical authorities do attribute certain medical problems and trends in diseases to the increase in consumption of these basic sugars.

But as the Chairman has pointed out, we would probably have difficulty on the floor with this election, unless we had it backed up with some pretty good staff work.

Mrs. AIKIN. I have submitted quite a bit of material.

Mr. GUDE. And there would be another problem also, which has come up before, that to the extent that we levy these taxes in the District it would lead to real problems with the neighboring jurisdictions. I can see a lot of shopping out in to Maryland and Virginia, because this would substantially raise the price on the market in the District, I think.

Thank you very much.

Mr. CABELL. Thank you again, Mrs. Aiken. And I join with my colleague in complimenting you on this, your first appearance. I think

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that you have certainly conducted yourself with aplomb. And frankly, I think you are more of a pro than you let on.

Thank you very much.

Mrs. AIKIN. Thank you.

Mr. CABELL. The hearing will now adjourn subject to call of the Chair.

(Whereupon, at 12:20 p.m., the committee adjourned, subject to call of the Chair.)