Tax on pop could bring in more cash than additional HST on books

Newfoundland and Labrador government briefing notes obtained by CBC News show a tax on sugary drinks could bring in a lot more than the new tax on books.

The briefing notes were prepared in 2011. Earlier this year, they were used by Finance Minister Cathy Bennett as her rationale for nixing a junk food tax as a way to raise money.

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The revenue calculations were initially blacked out in the documents, which were obtained through access to information. But government released the information after CBC challenged the redaction.

Junk food is not in itself the source of negative health outcomes and the costs of obesity.- Government briefing notes

Adding 30 per cent to the cost of sweetened beverages like soda and sport drinks could bring in $10 million a year, the information note states.

For a case of cola that costs $4.50, that hike would add an extra $1.35 to the overall cost to consumers.

That would give the government substantially more revenue than the new provincial tax on books, which will add $2.1 million a year when it's fully implemented.

But government officials said adding a tax to junk food would be complicated and costly.

Since HST is already applied to junk food, a new provincial tax would need to be added — a complication Bennett said the provincial government can't afford.

"As a province, we would have to take on the administrative responsibilities that would be equal to the functions of the Canada Revenue Agency," Bennett told CBC in May.

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"It wasn't something that we thought a province of 500,000 could take on," said Bennett, who owns several McDonald's franchises in the St. John's area.

But NDP Leader Earle McCurdy said taxing junk food would still be better than increasing the cost of buying books.

"To me it makes a lot more sense to put a tax on something that is bad for people's health, which in turns adds to people's healthcare costs, than it does to tax something like books," he said Tuesday.

Junk food itself not source of 'negative health outcomes'

Another key challenge is figuring out what that new tax would apply to; whether it would it be based on a certain sugar content, or fat level.

"If the federal government is not involved, how would provincial authorities test for sugar content?" the information note asks.

Some areas of the briefing note remain redacted, and what was released doesn't detail how much administering a new tax could cost.

It cites a 2006 figure that unhealthy eating costs the province $126 million a year.

But it warns that adding a tax wouldn't necessarily make people switch to healthier options.

"Junk food is not in itself the source of negative health outcomes and the costs of obesity," it states.

Tax is regressive: officials

Officials also warn it would be lower income people hit the hardest by the sugary drink tax.

It cites an Alberta study that lower income people spend more of their money on junk food than wealthier people do.

"It will also mean that low-income taxpayers will pay more as a proportion of income, relative to higher income earners," officials wrote. "In this regard, a soda tax is regressive in nature."