Taxes and Soft Drink

Taxes and Soft Drink 2017-10-03T19:48:44+00:00

Whether in the form of a new excise tax on water, or a sales tax on soft drinks, proposals to levy a special new tax on beverages are usually the result of some special interest organization seeking to find revenues to fund a new state program.  More often than not, the new government program will also be a worthwhile or benevolent sounding cause, such as, for example, a catastrophic health insurance program.

We are adamantly opposed to targeted new taxes on our products.  This does not necessarily mean we would oppose a catastrophic health insurance plan or other appropriate program — only that we feel if the state wants to finance such a program, it should look to general, broad-based taxes on businesses and individuals, instead of targeting certain industries or products to bear the entire tax burden.

People tend to forget that the beverage industry in Michigan already shoulders a financial burden that no other business group in the state has to bear.  We already spend tens of millions of dollars annually to implement a statewide recycling program for Michigan citizens (called the deposit law).

Special taxes on targeted products have two characteristics universally regarded as constituting very poor tax policy.  First, by selecting out a certain product or business for special taxation, the state is actually being very discriminatory in its imposition of financial burden.  Second, such a tax on refreshment beverages is also harshly regressive, hurting our very low income residents some 10 times harder than the middle class.

By imposing a tax on water or soft drinks, the state is picking winners and losers, which amounts to the very few (in this case the beverage industry and  economically disadvantaged citizens) having to bear the costs to provide for the many.

Such a tax also sets a dangerous precedent.  Over 30 years ago, Michigan citizens voted overwhelmingly to remove the sales tax on food and drugs.  The message was: do not tax our food and drugs.  Now, by re-imposing a tax on beverages, the legislature is opening the door to a potential host of new taxes on virtually any food product.  What product will be next, when another government program is looking for a source of special funding?

Finally, not only would it be disturbing that the legislature might impose a new tax that is well known to be discriminatory and regressive, but such a tax would also inappropriately target Made in Michigan Products.  Probably 99 percent of the major brand soft drinks sold by our members are prepared and bottled here in Michigan, by Michigan Employees, in our Michigan Bottling Facilities, and delivered to your local grocery store by our Michigan Drivers.  Such a proposed new tax would only hurt jobs and products made in Michigan!  Bad judgment call.