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New York Gov. David Paterson's proposal to levy an 18 percent "obesity tax" on carbonated beverages in 2009 has spurred the beverage industry to register its objections.
Liz Morrill, founder and c.e.o. of Fizzy Lizzy, a brand of all-natural sparkling juice based in New York City, has issued urgent appeals to all members of the New York State Legislature to reject Paterson's plan, which she says would increase the city's existing sales tax on sparkling juice (and on various other packaged beverages), in place since 1965, to more than 26 percent.
"The proposed tax is completely irrational," argued Morrill. "For instance, it imposes no tax on 100 percent juices such as Tropicana Pure Premium Orange, which has a whopping 165 calories and 33 grams of sugar per 12 ounces, but levies a massive 26 percent tax on Fizzy Lizzy Tangerine, (50 percent juice and 50 percent seltzer), which contains only 100 calories and 24 grams of sugar per 12-ounce bottle. I started this company precisely because people wanted a lower-calorie and refreshing alternative to plain juice. Now it seems that Gov. Paterson wants to penalize my company, and others like it, for providing healthful, all-natural alternatives.
Morrill added that the tax excluded diet carbonated beverages, which, she alleged, "numerous scientific studies have shown actually increase one's yearning for sweets," and almost all noncarbonated beverages, without regard to nutritional profile. She accused the proposed tax of "mindlessly demonizing carbonation."
"I would urge all new Yorkers to contact Paterson, as well as their state senators and assembly members, to register their opposition," Morrill told Progressive Grocer. She said she was unaware of any organized opposition to the proposal as yet.
Additionally, citing analysis from by the New York State Assembly Republican Ways and Means Committee and made available by Assembly Republican Leader Jim Tedisco, the Washington-based American Beverage Association (ABA) said last month that the average New York family would be saddled with an almost $4,000 tax hike as a result of such proposals as the tax on soft drinks and a five cent-per-container tax on bottled water and juice. The analysis also shows that the tax increases could cause the loss of one in 10 jobs in the state, according to the trade group.
"It's mind-boggling that in the middle of a recession, the governor would impose a $4,000 tax hike on the very families who can least afford to take on this financial hit," said Kevin Keane, s.v.p. for public affairs for ABA, which represents the non-alcoholic beverage industry. "In an economy like this, the last thing that government should be doing is raising taxes on hard-working families."
The association also took strong issue with state's position that the soft drink tax will curb obesity, since "singling out one product is not going to make a dent in such a complex problem," noted Keane.
Instead of levying the taxes, the ABA recommended that the state legislature spend more responsibly.
The industry is bolstered in its stance against the obesity tax by the apparent rejection of the idea by state residents: A recent Quinnipiac University Polling Institute published in the Westchester County Journal News revealed that 67 percent of New York voters opposed the soft drink tax. The newspaper quoted Quinnipiac Polling Institute director Maurice Carroll as saying, "Voters aren't swallowing the proposal to tax nondiet soft drinks, the so called 'fat tax.'"