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    New York Retailers Weigh Impact of Sugary Drinks Tax

    Surcharge will drive up prices and send customers to Native American stores, says NYACS.

    By Hank Behar

    NEW YORK -- If the tax bill proposed by New York Governor David Paterson in his state budget is passed, a shopper in the Empire State will be forced to pay $1.44 more per 12-pack of non-diet Coke and Pepsi or similar drinks -- nearly 10 times the excise tax on a 12-pack of beer.

    "Not only will that artificially drive up prices, but it will chase our customers away to nearby Native American stores to buy those beverages 'tax free,' replicating the cigarette tax evasion epidemic that has crippled our stores," noted James Calvin, president of the New York State Association of Convenience Stores (NYACS).

    The tax would be imposed at a rate of $7.68 per gallon of beverage syrup, and $1.28 per gallon of pre-packaged drinks (1 cent per fluid ounce), and would apply to any non-alcoholic beverage, carbonated or non-carbonated, containing more than 10 calories per eight ounces. That includes non-diet soda, water, sports drinks, energy drinks, fruit and vegetable drinks containing less than 70 percent natural juice, bottled coffee and tea, and powdered and frozen concentrate. Only dietary aids, infant formula, milk and milk products, and exports would be exempt.

    Collections would be made at the distributor level, defined as an importer, manufacturer or bottler.

    The objective of the tax, announced the governor, is to reduce the consumption of sugar-sweetened drinks by approximately 15 percent, thereby fighting obesity and improving nutrition, while raising $1 billion annually "to recover some of the health costs caused by consumption of high-calorie, nutrition-poor foods and beverages."

    Calvin argued: "But we don't understand why customers who consume these beverages in moderation should pay a financial penalty because of the dietary habits of some of their neighbors. The governor's solution to obesity is for cash-strapped, thirsty New Yorkers to pay $1 billion more to their bloated government."

    NYACS plans to oppose the new tax both on its own and as a member of a coalition called New Yorkers Against Unfair Taxes (www.nobeveragetax.com).

    The effective date of the new tax, if passed, would be Sept. 1.

    Meanwhile, NYACS applauded the governor on another matter: the 'tax evasion epidemic' taking place at Native American stores where cigarette taxes are not collected on sales to non-Indian customers. The governor announced that his Tax Department will implement the law already on the books that requires wholesale distributors to pre-pay the taxes before they deliver cigarettes to the tribes. At the same time, in order to preserve the tax exemption on Indian sales to tribal members, the tribes will be provided with a reasonable quantity of "tax exempt coupons" to present to their wholesalers.

    However, there is also a proposal to raise the excise tax on a pack of cigarettes by $1. That would wrest the highest-tax-state crown away from Rhode Island and bestow the dubious honor on New York with a tax of $3.75 per pack -- 31 cents higher than Rhode Island's $3.46. If passed, the new tax would go into effect June 1.

    "It would be a mistake to further increase the cigarette tax rate prior to the enforcement initiative," said NYACS' Calvin. "First things first. Capture the millions of dollars in cigarette tax revenue that is escaping at the current rate, and then examine whether any change is really necessary."

    By Hank Behar
    • About Hank Behar

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