If a government plan to impose a so-called “sweet tax” becomes law, then those sweets and other food and drinks that negatively impact one's health could become costlier for wholesalers, retailers, and consumers-for a good cause.
Acting governor Eloy S. Inos said yesterday that the government plans to impose a “sweet tax” in combination with “sin tax” in the existing excise tax, and the additional revenue generated from the imposition of this “sweet tax” will go to a debt relief account to help the Commonwealth Healthcare Corp. repay its loans, including those to the Marianas Public Land Trust.
While a “sin tax” is imposed mostly on alcoholic beverages and tobacco products, the “sweet tax” will be imposed on candies, soft drinks, and other food and drink products that help lead to a lot of lifestyle diseases such as diabetes and obesity.
The actual percentage increase in excise tax as a result of the “sweet tax” will be known once an economic analysis is done, Inos said.
“We're looking at possible increase in some of the sin tax if you will, mostly related to health issues. Basically to help raise funds and at the same time use that as a deterrent. [Among those that could be taxed] like candies, cigarettes, soft drink, beer, beverages.It's a combination of sin and sweet tax,” Inos said in an interview at the 25th anniversary of the Commonwealth Health Center.
He said the additional revenue “will go into a debt service fund that will be maintained and built up to help in any debt that CHC gets into. For example, the $7 million or $11 million debt so that there's no question or that the issue of repayment ability would be less controversial.”
He said the tax will be collected mostly at the point of entry because it will be part of the excise tax, but the sweet tax will be earmarked specifically for CHC's loan repayment.
Lawmakers, meanwhile, said they are waiting for a draft bill from the administration for this “sweet tax.” Any revenue-generating bill needs to originate from the House, which may hold its next session on Tuesday or Wednesday.
CHC is in deep financial trouble, and needs every financial help it could get, including proposed appropriation from the Legislature, loans and line of credit, and a proposal to increase hospital fees by up to 300 percent.
Inos, at the same time, said MPLT has yet to release any check to CHC as part of a $7 million line of credit agreement between the two. “Right now, it's all up to MPLT trustees, but we feel good about repayment of at least the $2.2 million we're asking. .The sooner the better. Actually, I wanted it yesterday.”
The last time the cigarette excise tax went up was in December 2010, by 25 cents per 20 sticks, resulting in some $2 increase or more in the price of every pack of cigarettes.
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