NCPA - National Center for Policy Analysis


May 19, 2010

As they struggle with budget deficits, states from New York to Washington are looking to candy and soda taxes to help bridge the gap, says the Wall Street Journal.  Now comes the hard part: defining candy. 

  • In Washington, a new candy tax will apply to Butterfinger candy bars, yet Kit-Kat wafers remain excise free (the law exempts foods with flour in them).
  • There is also confusion in Colorado, where Kit-Kats are also untaxed, but Twix bars face levies.
  • And after Illinois passed a candy tax last year, retailers in Chicago were unsure if Twix bars -- some of which contain flour and peanut butter -- were food or candy. 

More than a dozen states have passed or proposed some sort of candy or soda tax in the 2010 legislative session, and most of them are bound to face some sort of confusion, says the Journal: 

  • The problem is many states don't tax food because food is essential and taxing it can push the poor toward malnourishment or unhealthy eating.
  • That exemption has traditionally extended to candy and soda, but with budgets lean many states are looking to either remove the tax exemption on those foods, or pass new candy and soda taxes altogether. 

Candy isn't the only food tax causing confusion.  In New Mexico, a proposal (later vetoed) earlier this year would have taxed tortillas of the flour variety, but not corn or whole wheat. 

Source: Conor Dougherty, "Candy Taxes Struggle to Define Candy," Wall Street Journal, May 17, 2010. 

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