A new tax on tea… and other bottled beverages
Shelby County Commissioner Steve Mulroy plans to soon introduce a resolution in support of the Tennessee bottle bill. I urge you to research the issue and decide if this is really something we want, or need. Here’s a related article I wrote that appeared in the June issue of the Main Street Journal:
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 protesters have some momentum on their side and a ready-made issue at hand, should they choose to embrace it.
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This was great when I was kid–we used to make our baseball card money by picking up bottles. But this sounds like it would apply to plastic and aluminum as well, which needs to be stopped. They already have a significant portion of the population bamboozled into handing over their can money to the city on the curb every week.
Mick, thanks for attending Thursday night’s public forum in Memphis on the bottle bill. However, I’m afraid you did not understand the amended handling fee (“container recovery fee”) that will be paid by the beverage distributors. You can read the bill and the amendment at http://www.tnbottlebill.org.
Following an initial “ramp-up” period (see next paragraph), the amended fee is just one-eighth of a cent per container. This represents NO NEW COST to the beverage distributors; rather, it simply replaces the existing “litter taxes” that the beverage distributors have been paying since 1981. (The existing litter taxes will be repealed.) The container-recovery fee will be used for exactly the same purpose as the litter taxes are now–to fund the county litter grants program that was created in 1981 at the urging of the beverage distributors. This includes Keep Tennessee Beautiful.
About the ramp-up fee: For the first nine months of the ramp-up period (Oct 2010-June 2011, assuming the bill passes in 2010 and goes into full effect on April 1, 2012), the distributors pay an advance of one-fourth of a cent per container. This is to cover the various costs of getting the program up and running, getting redemption centers ready and so on. However, for the next 36 months (July 2011-June 2014), the fee DROPS to less than four-hundredths of a cent per container ($0.000374). This essentially “repays” the distributors for the money they advanced the program.
Finally, on July 1, 2013, the distributors’ fee finalizes at one-eighth of a cent, and stays at that level from then on.
As for Michigan’s $13 million in fraudulent redemptions: It’s true, as I said in the forum, that every bottle-bill state has some degree of fraud, just as every convenience store has some degree of shop-lifting. However, in almost 40 years of container deposits, no bottle bill program has ever been at risk from frauduent redemptions. Michigan’s $13 million represents only 3 percent of the total redemptions–and the state readily acknowledges that even fraudulently redeemed containers help reduce disposal, litter and other costs.
And if I might add one other note re obesity taxes. The bottle bill has nothing whatever to do with an obesity surcharge, and nobody to my knowledge has even raised the issue in Tennessee.
Oops–Correction. I meant to say (paragraph 4, above)–that the distributors’ fee finalizes at one-eighth of a cent on July 1, 2014 (NOT 2013). My mistake.
How much of our tax money does it cost to clean up vacant lots, highways, and commonly used areas? Most people never complain about the cost of a bottled beverage beit $1 or $1.05. I’m tired of my tax money being spent on clean up and non-environmentally friendly disposal of bottles. Do you have an alternative option?
Dwayne, I would think an employee of the City of Memphis Finance division would have better access to such information than little ole me, but…
Currently the litter grant bill, funded by taxes on beverage companies, pays for roadside cleanup. Shelby County was the biggest recipient of these grants in 2007, to the tune of $242,052. To its credit, the bottle bill would continue to fund this program. Otherwise, the bottle bill only addresses about 10% of the composition of litter, according to the executive director of Keep Knoxville Beautiful. And it would do so by creating a new bureaucracy, instituting a new tax on consumers, and would be prone to massive fraud — a system that states such as Michigan and Hawaii and found to be nearly impossible to audit. It would also require frequent changes, in response to inflation, or in response to system failures and fraud, as the taxpayers of Iowa and Massachusetts have discovered.
My alternative option would involve private solutions. It would involve a mix of voluntary collection and for-profit services. As the bottle bill’s proponents admit, these materials are valued at $100 million each year. With an incentive like that, I think we can find a way to do this without more taxes and more government. Take, for instance, that I recycle all of my cans and bottles, as well as all of my paper and cardboard, without a single bureaucrat twisting my arm.
I can google also, but my postion in the finance division does not allow me access to such information. My position in the finance division is in the prevailing wage office monitoring compliance with capital improvement workers. My interest is as a concerned citizen, missionary, and green activist if you must be corrected. My work in Ghana, Togo West Africa, and Haiti are just a few other priorities on my list not to mention working towards a doctorate in organizational leadership. (www.ibuildbyfaith.com) Growing up in Orange Mound and having the opportunity to attend TSU and acquire a BS in Architectural Engineering degree and later a masters in management is not typical for a person with my background. I am objective and encourage open dialogue from those who only look at the numbers and never get to the root of the problem. Living in Bartlett do you see overgrown lots, dirty streets, or large scale unemployment? True most of the problems come from the community, but many have never been given a fair chance or opportunity. You stated the bottle bill should be run by private citizens. Are you willing to volunteer you time or invest in Orange Mound or other inner city communities? Why or why not? The truth is the private sector and volunteers have not done much to date so why do you think they will today.
The bottle bill is just one project I’m supporting. What about net zero metering with MLG&W, free home energy audits, requiring Sharp to install and train individuals on solar panels in Memphis while receiving PILOT funds, setting standards for the CSA weatherization program, and pathways out of poverty.
The data you presented in your first argument was skewed also. The bottle bill connected to doctors fees. Come on, that’s not comparing apples to apples.
It seems working at youth villages you would have a better understanding of the demographics I come from and represent. Again, I grew up in Orange Mound and attended Melrose High so I have a responsibility to advocate for those who can not or will not articular concerns of the community.
http://www.google.com/profiles/mickwright
http://www.commercialappeal.com/news/2009/jul/15/leadership-bartlett-ready-to-take-the-helm/
Dwayne, congratulations on all of your achievements, which are impressive for someone from any background. And thank you for your work overseas and in the community where you grew up. Your passion and energy are exactly the kinds of individual, private characteristics I believe can, do and will solve any problem we set our minds to. And when you combine these with monetary incentives, the possibilities increase exponentially.
Mick:
We may not agree on methods but I’m sure we agree on what needs to be done. I wish everyone could engage in constructive dialogue as we have. I wish many would recycle without needing or wanting incentives. We share the same planet and everyone should pull their own weight. If they could only see third world countries and how our communities could eventually look like mad max if we do not become good or green citizens. I will continue to check your blog because you give a different perspective with a passion I respect. Keep doing what you do and I’m sure we will find common ground often along the way. Take care and blessings.
Dwayne