june 09Main Street Journal
June 2009
pp. 10-11

On tax day, half a million Americans across the nation gathered to protest an out-of-control government and the oppressive tax increases that will invariably follow.

As we wait to see what, if anything, these “Tea Party” activists plan to actually do about it, state and federal legislators are busy serving up the perfect issue for them to tackle first – new taxes on tea.

Fifteen Tennessee State Senators and Representatives, a third of them from Memphis and Shelby County, have co-sponsored HB 1167 / SB 1404. The bill would institute a 5-cent surcharge on every container of coffee, tea, water, beer and soft drinks sold in the state. It also levies a separate “handling fee” on beverage distributors, starting at 0.25 cents per container and doubling every year until 2012 — a cost that is ultimately paid by the consumer.

The bottle bill is intended to reduce litter and increase recycling, according to Marge Davis, a Mount Juliet activist who leads the statewide lobbying effort.

But the bill addresses only a fraction of litter’s composition, requires a new bureaucracy to oversee the program and invites fraud (costing $13 million annually in Michigan – one of only 11 states with a bottle deposit law). It also presents a series of enforcement challenges, a situation The Leaf Chronicle calls “an administrative nightmare.”

Davis argues that the 5-cent fee is a deposit, not a tax, since consumers are refunded upon returning the container to an authorized redemption center. Then again, taxpayers may also receive a refund on their income taxes if they jump through the right hoops. Either way, the bottle bill adds roughly 20% to the cost of a 12-pack of soda at the point of purchase.

“The cost of the bottle bill is too much to ask from the already overtaxed citizens of Tennessee who are not likely to see their nickels go to a real reduction in litter,” according to the Johnson City Press.

Last year, an opinion poll commissioned by Scenic Tennessee, led by Davis, found more than 80% support for the bill among registered voters. Referring to the poll in a recent Senate committee hearing, bill sponsor Doug Jackson (D-Dickson) said, “This is a burden that the people want — they want this!”

Meanwhile, a U.S. Senate committee recently heard from experts who recommend that Congress pay for its comprehensive health-care overhaul with a federal excise tax on sodas, soft drinks and “ready-to-drink teas.”

Federal lawmakers haven’t indicated how big the tax might be, though the Center for Science in the Public Interest suggests one cent per ounce, or 12 cents per can.

Voters in other states have been successful in fighting similar legislation. In New York, Gov. David Patterson was forced to drop a proposal for an 18% tax on soft drinks. In November, Maine voters repealed a tax on soda that had been approved by the state legislature and amounted to 42 cents per gallon — 22 cents for a two liter — as well as a $4 per gallon tax on the syrup used in making soft drinks.

So while they may face some formidable opposition from health care and environmental lobbyists, the tax protestors have some momentum on their side and a ready-made issue at hand, should they choose to embrace it.