The beverage industry suffered a defeat last week in Baltimore, where the city council passed a 2-cent tax on bottled drinks such as soda, water, beer and distilled spirits. It was a rare setback for Coca-Cola, PepsiCo and Dr Pepper Snapple after months of successes in beating back "soda tax" threats around the country.
The measure in Baltimore wasn't so much about the health issues surrounding sugary drinks -- the focus of some beverage-tax supporters -- as it was about tight public budgets.
Baltimore Mayor Stephanie Rawlings-Blake pushed hard for the tax as a way to plug the city's estimated $121 million budget deficit. A number of retailers and bottlers opposed the tax, which excludes juice and dairy drinks. An anti-tax coalition launched print and radio advertising in recent weeks to stop the measure.
"We don’t want to lose," said Kevin Keane, senior vice president of public affairs for the American Beverage Association, which represents companies that make soft drinks, bottled water, sports and energy drinks and ready-to-drink teas. "But if you look, you certainly couldn’t call it a complete loss." He noted that the tax is set to expire in three years, applies to alcohol as well as soft drinks, and falls short of the 4-cent levy originally sought.
Rawlings-Blake said Baltimore is working through the worst budget crisis in its modern history. She said the bottle tax revenue will help the city restore funding for services such as street cleaning, graffiti clean-up and waterway maintenance.
Beverage industry groups point to surveys, such as an Adweek Media/Harris Poll released earlier this month, that show most Americans are opposed to taxes on soft drinks and fast food. Tax proposals specifically aimed at sugary beverages were defeated recently in Philadelphia and Washington. The ABA is backing a ballot initiative to strike down a tax on soda, processed meat, candy and gum in the state of Washington. In Baltimore, the focus will be on making sure the tax is sunset in three years or sooner.
"People do not want any new taxes, especially on their grocery carts," said Keane. "There’s been an all-out push by advocates around the country to get traction around a soda tax and they just haven’t been able to get it."
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