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San Francisco joins sugary drinks fray with tax proposal

By Laila Kearney

SAN FRANCISCO (Reuters) - San Francisco may become the latest U.S. city to try to curb the consumption of sugary drinks with a proposed ballot measure to impose a tax on beverages seen as a culprit in rising rates of childhood obesity and diabetes.

Supervisor Scott Wiener on Tuesday formally proposed asking voters in November 2014 to impose a 2-cents-per-ounce tax on soda and other drinks with added sugar sold in the famously liberal northern California city.

No other U.S. city has enacted such a tax, though a similar proposal is in the works in the southwestern Colorado town of Telluride, according to the Rudd Center for Food Policy and Obesity.

Two other California cities, Richmond and El Monte, failed last year in their attempts to become the first in the nation to impose taxes of a penny per ounce on businesses that sell sugary drinks.

In New York, Mayor Michael Bloomberg last year spearheaded a ban on the sale of large, sugary drinks last year, but the move was later declared illegal by a state judge after a challenge by soft drink makers and a restaurant group. New York's highest court has agreed to hear an appeal.

"We know that this will be a long road," Wiener said in introducing the measure to his colleagues. "This type of proposal has occurred in other cities and the beverage industry always comes out full guns blaring, so we're going to need to pull together to make sure that this wins."

A ballot measure would need two-thirds support from voters in order to pass.

Wiener said his proposed measure would reduce the consumption of sugary beverages while specifically setting aside proceeds of the tax for physical education and health programs.

"Voters really want to know where their tax money is going to go," he said.

In both Richmond, located in the San Francisco Bay Area, and El Monte, located east of Los Angeles, revenues from the proposed taxes would have gone to each city's general fund.

'WASTEFUL DISTRACTIONS'

The tax would amount to an extra 24 cents per average 12-ounce (35 cl) can of soda. Wiener said it would bring in an estimated $30 million in tax proceeds annually. It would apply to drinks with added sugar and at least 25 calories per ounce.

A third of the expected tax windfall would go to San Francisco schools for physical education and healthy lunch programs, and the remainder would go to city parks and recreation programs and community health organizations.

Roughly two out of three California voters surveyed in a Field Poll last fall and released in February said they would support taxing sugary beverages if proceeds were tied to improving school nutrition and physical activity programs. The poll of 1,184 voters had a margin of error of plus or minus 3 percentage points.

Wiener's proposal will go to a city Budget and Finance subcommittee for a hearing in the spring.

The board would vote between May and July on whether to add the tax measure to the city's elections ballot, Wiener said.

A spokesman for the American Beverage Society said raising taxes and restricting drink consumption would not necessarily lead to a healthier population.

"Californians have rejected beverage taxes like the one San Francisco Supervisor Scott Wiener proposes because such measures are unnecessary, wasteful distractions from serious policymaking," spokesman Chuck Finnie said in a statement.

The society, which represents industry leaders including PepsiCo Inc and Snapple Group Inc, has spent millions of dollars fighting proposed soda taxes around the country.

"Providing people with education, opportunities for physical activity and diverse beverage choices to fit their lifestyles are proven strategies for maintaining health," Finnie said.

(Editing by Daniel Trotta, Gunna Dickson and Leslie Adler)

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