June 27 (Bloomberg) -- Lobbyists for Coca-Cola Co., Archer Daniels Midland Co. and allies in the soft-drink industry are moving to kill a proposal to tax sugared beverages to help finance a federal health-care overhaul.

The Senate Finance Committee included a soft-drink tax among possible sources of revenue to pay for expanded health- care programs that will cost $1 trillion over 10 years. Supporters say a penny-per-ounce federal tax would raise $16 billion a year and cut non-diet soda consumption by 10 percent.

Government moves discouraging soft-drink use would hit companies already suffering from sliding sales and prices. Soft-drink sales volume fell 3 percent in 2008, dropping for the fourth straight year, according to Beverage Digest, an industry newsletter.

“You’re not going to solve the complexities of health- care reform with a tax on soda pop and juice drinks,” said Kevin Keane, a spokesman for the American Beverage Association. “We’re not against health-care reform. We just believe this potential funding mechanism isn’t the way to go.”

The price tag is among the biggest challenges in President Barack Obama’s push to revamp the U.S. health-care system. Lawmakers are looking at dozens of proposals, searching for savings and new revenue.

Industry ‘Under Attack’

The beverage association, a Washington lobbying group for Atlanta-based Coca-Cola and other non-alcoholic beverage makers, is leading efforts to quash a soda tax. The group called on members and their employees to put pressure on Congress, saying the industry is “under attack.”

The Corn Refiners Association, a Washington trade group that represents Decatur, Illinois-based Archer Daniels, is also in the fight.

“The point is to scare legislators and the White House about putting something on the table by getting a taste of the attacks they will encounter,” said Julian Zelizer, a professor of history and public affairs at Princeton University in New Jersey.

Coca-Cola’s press office directed questions to the beverage lobby group. Archer Daniels spokesman Roman Blahoski declined to comment.

On the other side, the Center for Science in the Public Interest and the American Public Health Association, both based in Washington, are pushing to keep the tax as an option as long as Congress is struggling to pay the health-care tab.

‘Painless’ Revenue

“It’s a great way to raise revenue and a relatively painless way to do so,” said Georges Benjamin, executive director of The American Public Health Association.

A soda tax is on the Senate Finance Committee’s list of potential revenue sources. The Congressional Budget Office estimated that a 3-cent tax on 12-ounce cans of sodas would raise $50 billion over a decade.

Senate Finance Committee Chairman Max Baucus, a Montana Democrat, has played down the proposal’s chances, saying a soda tax is “on life support.” Farmers in Baucus’ home state grow sugar beets, while many of those in Iowa, home of the committee’s ranking Republican, Charles Grassley, grow corn, which is used to make sweeteners for soft drinks.

With a pressing need to raise money to pay for the overhaul, other lawmakers aren’t so quick to pull the plug. In the House, New Jersey Democrat Bill Pascrell, a member of the tax-writing Ways and Means Committee, said costs of a health- care bill are so high that lawmakers will surely consider a soda tax. “If we’re going to be preventing chronic diseases, absolutely you put that on the table,” he said.

‘Empty Calories’

Advocates argue that taxing sweetened drinks would both raise cash for health-care coverage and reduce the need for doctors’ visits.

Sweetened drinks are “worse than practically every other food on the market,” said Michael Jacobson, executive director of the Center for Science in the Public Interest in Washington. “They’re empty calories, we consume such huge volumes of them and liquid calories are particularly conducive to obesity.”

The beverage lobby and its supporters say it’s misguided to target a single product.

“It’s erroneously suggesting that Americans can improve their health by eating one food or not eating another food,” said Audrae Erickson, president of the corn refiners group.

A soft-drink tax also would fall most heavily on poor people, she said. “When you tax a food, you’re disproportionately affecting those at lower ends of the income scale,” Erickson said.

To contact the reporter on this story: Jonathan D. Salant in Washington at jsalant@bloomberg.net;

Last Updated: June 27, 2009 00:01 EDT