There is no question Baltimore City schools need financial help to renovate aging buildings, but one aspect of the plan to finance this massive renovation project misses the mark and will have a devastating impact on hard-working businesses and families in the city.
The proposed plan, known as the "bottle tax," would increase the current 2-cent tax on beverage containers to 5 cents for city residents when they purchase soft drinks, iced teas, water and juices from their local grocery stores. The bottle tax, which is hidden from consumers at the point of sale, amounts to a whopping 150 percent increase.
This is not a new concept for Baltimore. A beverage container tax was put into place several years ago and then repealed because of the adverse effect it had on businesses in the city.
Some in Baltimore hope to persuade the City Council that the tax increase will enable the city to borrow more money to finance various projects, including school renovations. We strongly believe that the increase in the bottle tax is misguided.
Here's why: It is a regressive tax that hard-working families in Baltimore will shoulder disproportionately. If the tax increase is approved, that 12-pack of soda will cost them 60 cents more in taxes alone, and a case of bottled water would be another $1.20. Worse still, nearly one out of every five people in Baltimore City lives below the poverty line, according to theU.S. Census Bureau, and — as is the case with other families in Maryland — this regressive taxation would come at the same time these families are already struggling with escalating food, gas and utility costs.
The tax would also increase the cost of doing business in Baltimore City for retail establishments that depend in part on the sale of beverages for their livelihood. Rob Santoni Jr., chief financial officer of Santoni's Supermarket in Highlandtown, reports that total store sales fell by $438,000 after the city imposed the 2010 tax and gave residents a new incentive to shop outside the city.
The proposed 5-cent tax will strangle retailers further by giving city consumers even more reason to shop in neighborhoods bordering Baltimore, where they can purchase soft drinks, juice, water and iced teas at lower prices. Grocery retailers, who provide thousands of good-paying jobs in the city, fear they will be forced to trim their workforces as the expanded tax eats further into their razor-thin margins. City residents, who already bemoan the lack of adequate shopping in the city, can expect even fewer choices as existing retailers retrench and new retailers avoid opening city locations.
If history is a reliable indicator, the bottle tax increase could result in layoffs in the local retail and beverage industries. Shortly after Baltimore City enacted the bottle tax in 2010, retailers reported job losses and Pepsi stopped manufacturing beverages in Baltimore.
Isn't it time to start creating jobs? In a city where the unemployment rate is 9.3 percent, 3 percentage points higher than the state's rate, why aren't we focused on policies that promote job growth and encourage businesses to expand and hire?
With more than 25,000 people unemployed in Baltimore, every job is precious, especially these good-paying manufacturing and distribution jobs that pay well with generous benefits.
Maryland's beverage industry supports strong schools, but taking money out of the pockets of hard-working families, driving prices higher and threatening jobs isn't the answer. Yes, we need to renovate city schools, but making an already onerous bottle tax even more burdensome is not the way to do it.
Ellen Valentino is executive vice president of the Maryland Delaware D.C. Beverage Association and a member of the Stop the Baltimore City Beverage Tax coalition (nobaltimorebeveragetax.com).