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Governor's proposed excise tax on soft drinks and bottled water
As president of the Washington Beverage Association, our members recognize that these are incredibly tough times and the state is scrambling to find ways to close the state’s budget shortfall.
But as companies also try to weather a very difficult economic time, we know that singling out individual industries is not only unfair, but will inevitably cost more in lost jobs than revenue generated.
My father started Harbor Pacific Bottling Inc. in 1957. If the governor’s proposed excise tax on soft drinks and bottled water is made into law, I may be forced to eliminate some of those good-paying jobs or potentially sell our business entirely.
Why? Because the excise taxes will cost our company $1.2 million — multiples more than what our company makes in profit in a year. In fact, the proposed excise taxes are 54 times more than the unemployment insurance tax we pay, and 32 percent more than we pay in property tax.
Clearly, we can’t absorb such a tax increase. But at the same time, our sales already are down due to these tough economic times. Increasing our prices at retail to cover these punitive taxes will only further depress our sales. For every 1 percent the price goes up, we lose approximately 1 percent in sales. These are very price-sensitive products, and the governor’s proposal would increase the retail price of many of our soft drinks by 25 to 30 percent, and a case of water by more than 100 percent.
And it is not just the bottlers.
Suppliers like Western Container in Fife, which already reduced production by 28 percent because of a drop in beverage sales, will be especially hard hit by an industry-focused excise tax. Just last year, Western Container was forced to significantly reduce its workforce by 35 percent, and if this tax were to take effect, would be forced to reduce its workforce by another 33 percent.
In talking with suppliers, bottlers and retailers from the Federal Way area, Spokane, Bellingham, Seattle, Omak and towns throughout the state, the consensus is the same: It is clear that an excise tax would seriously depress sales, cost people their jobs and could potentially force many of them out of business. We already operate on a razor-thin margin in a highly competitive marketplace, and this severely restrains our ability to absorb higher taxes.
In short, these are the kinds of companies and jobs our lawmakers should be working to protect – not threaten. Our state’s unemployment rate already is at 9.5 percent. Let’s not drive it higher.
These are difficult times and I know our lawmakers face some tough decisions.
We just hope our legislators consider ways to raise funds that do not unfairly target individual industries. Rather, we should be looking to preserve jobs and promote growth in the private sector.
Tim Martin is president of the Washington Beverage Association and general manager of Harbor Pacific Bottling Inc., their family-owned business in Elma, WA, founded in 1957.