Commentary on the Administration's
Penny-per-Pound Sugar Tax Proposal

by Amy Moritz

Vice President Al Gore's February 19, 1996 announcement that the Administration plans to seek a penny-per-pound tax on Florida sugar adds one more layer of insanity to the federal sugar program, which is already one of the federal government's most ridiculous programs.

The penny-for-pound tax the Administration is seeking on Florida sugar produced in the Everglades is a funding mechanism for the Administration's newly-announced $1.5 billion program to purchase 100,000 acres of the Everglades, create an Everglades Restoration Fund for more federal land acquisition, and increase by 25 percent funding for federal Everglades science and management programs.

The penny-per-pound tax is estimated to generate about $35 million per year, or $245 million over seven years -- far, far short of the $1.5 billion the Administration's new proposal would cost.

But this plan's effect on the federal deficit is only one of the smaller reasons to oppose this plan. Consider this: the only reason there is sugar production damaging the Everglades is because the federal sugar policy, a combination of import quotas and price supports, makes it economical to grow sugar in the Everglades. If the federal government took a hands-off policy on sugar and let the free market rule, growing sugar in the Everglades would not be economical, producers would not grow sugar there, and the Everglades would not suffer from sugar-related damage.

Just as good, ending the sugar program is good for people, too. If the Everglades-harming federal price supports and import quotas were ended, sugar prices would drop by half. According to the General Accounting Office, the sugar program costs U.S. consumers an extra $1.4 billion each year. Still another reason to end the sugar program is its effect on jobs: the federal sugar program has killed thousands of American sugar industry jobs because it artificially doubles the price American producers must charge, and they simply can't compete with other producers. Since 1982, almost half of America's cane sugar refiners have shut down because of the federal sugar program.

If the Clinton-Gore Administration truly cares for the people of the United States and for the environment, it would drop the sugar taxing plan and instead work with Members of Congress to pass something like H.R. 1687, sponsored by Representative Dan Miller (R-FL), Majority Leader Dick Armey, Budget Committee Chairman John Kasich, and liberals Charles Schumer (D-NY) and Barney Frank (D-MA), to get the sugar program repealed. Ending the program would end sugar-related damage to the Everglades, reduce sugar prices for consumers by half, and end the terrible damage to sugar industry jobs. It would even help reduce the federal budget shortfall, because the artificially high price of sugar adds to the cost of programs like food stamps by $90 million per year.

Is there any good news about the Clinton-Gore sugar tax? There is for those who don't want to see Clinton and Gore re-elected. The penny-per-pound tax on Florida sugar would drive sugar industry jobs out of that state. On February 18 several thousand Floridians held a protest against it in Miami. Florida is a major must-win state for Clinton-Gore in November, and exacerbating the already insane federal sugar policy with a tax on Florida sugar doesn't bode well for their re-election effort.

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