February 25, 2015

Health advocates want state to stop taxing bottled water

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Bottled water by caterina clemente on Flickr

Photo of bottled water by caterina clemente with Flickr Creative Commons License

By Rebecca Lessner

For MarylandReporter.com

Health advocates moved to make water the “default drink of Maryland” by submitting a bill that would repeal the 6% sales tax on bottled water.

Some health foundations spoke before the Senate Budget and Taxation Committee in support of SB 574 on Wednesday, where legislators identified the elephant in the room — a possible general fund loss of $20 million annually.

The estimates vary agency to agency because of the lack of data collection on bottled water sales. According to the bill’s fiscal note, “the decrease may range between $7 million and $20 million annually.”

The Comptroller’s Office estimated the exemption could reduce general fund revenues by $7 million based on 2012 bottled water sales data provided by the International Bottled Water Association.

However, according to Sugar Free Kids Maryland and the American Heart Association, the question isn’t what the state will lose but what the state will gain by reducing the number of “sick kids” in Maryland.

“We are becoming sicker than we can afford to be in our state,” said Nikki Highsmith Vernick, president of the Horizon Foundation in Columbia.

“The direct and indirect cost to Maryland’s economy to be approximately $11.5 billion annually from the impact of obesity,” said Vernick.

The foundations hope to encourage the purchase of water over other sugary drinks by making bottled water more affordable, especially to lower income families who are counting pennies in their budgets.

Currently, the state does not consider water a tax-exempt “food,” according to the Department of Legislative services.

Other healthy choices are already exempt by the sales tax, including food sold in grocery stores, excluding certain prepared foods, and vending machine sales of milk, fresh fruit and yogurt.

“We already give an exemption to most food products in this state…and it seems to me water deserves not to be taxed, as it is a staple of life.” said Sen. Guy Guzzone, D-Howard, sponsor of the bill.

“Bottled water is regulated by both federal and state laws as a food product,” said Patrick Donoho, president of the Maryland Retailers Association.

“During natural or manmade events we are strongly recommended by government agencies to go out and purchase bottled water…so if the government is telling us to buy it, why should we tax it?” said Donoho.

While there was no panel of opposition to the bill, Sugar Free Kids Maryland Executive Director Robi Rawl wondered why the American Beverage Association had not joined them in support.

“We find that intriguing, since most of the companies that are a part of the American Beverage Association, such as Coke and Pepsi, also produce bottled water. So we’re curious as to why they are not coming out in support of this bill as it also supports their products,” said Rawl.

Ellen Valentino, chair of the Maryland-Delaware-D.C. Beverage Association, came to the committee hearing to comment but not take sides.

“Know that we are here and we are committed to the health and wellness phase…there are facts to deliberate on,” said Valentino.

Valentino continued on to say that health-conscious changes her companies were making included listing calorie count on beverages, which is something that is not required and was done “because the moms wanted it.”

Maryland is one of 17 states with a sales tax on water, and it is also one of the top 4 states that taxes water at a higher rate than other food and drink, said Rawl.

RebeccaAnnLessner@gmail.com

  • While they are at it, I think the panel should identify all “healthy” food and beverage items sold in the state (and subject to sales tax) and repeal the tax on them as well. First, however, they may want to come up with a good definition of the term “healthy food or beverage item.”

    • bendetta248

      They are already not subject to the state sales tax. That’s the point here. Bottled water is taxed but most of the food items, including “healthy” food items are not.

  • Angie Boyter

    Isn’t this attack a bit short-sighted? I could not agree more with the aims of the groups supporting healthy eating, but I shudder at all the plastic water bottles going into the landfill, no matter what they originally contained. What is wrong with water from the faucet in a re-usable bottle? Most of Maryland is actually known for its drinkable water, one of the reasons craft brewers like it here. And then there is the factor that if people did not spend their food dollars on bottled water they might have more to spend on healthy produce. Finally, do they really think someone contemplating a bottle of sugared soda is going to change their selection because they will save the sales tax?!

  • Vidi

    So we eliminate taxes on bottled water so that we have healthy kids. Will we cut the State’s health budget to make up for the loss of revenue as presumably we will now have healthier kids?
    Will we tax cream cheese and not tax fat-free cream cheese? Will we eliminate taxes from salt-free products?
    When will politicians stop picking winners and losers?

    • R Ferraro

      cream cheese & salt-free products are not taxed in MD

    • bendetta248

      The politicians have already picked the winners and losers. The problem is, somehow bottled water became a “loser.”

  • OsB4hos

    I am all for healthy kids and affordable options, but should we really drop an environmental tax on plastic petroleum-derived bottles so they can fill up a growing landfill? How about we eliminate the sugary drinks instead. This would save everyone money as they wouldn’t even be purchased in the first place! Or, how about we ensure that everyone has access to clean, free tap water?!

    • bendetta248

      This tax is not an environmental tax. This is the standard sales tax. Municipalities and counties that have implemented a “bottle tax,” which raises funds specifically for environmental usage, would not be affected by this bill.

  • joe

    Unless you live under a rock, plastic water bottles etal have been recycled via curbside pickup in Maryland towns and cities for 20 years.

    All one has to do is find a recyclable receptacle when out of the house, as these containers are located in many places.
    The various Maryland towns and cities derive revenue from recycling various items.

    • joe

      P.S. Plastic bottles could also be taken to a recycling center on a weekly basis.