Council’s Convoluted Container Tax Policy

Blondell Reynolds Brown | Photo by Jeff Fusco

Councilwoman Blondell Reynolds Brown introduced an intriguing bill on Thursday. After proposing a container tax last week as an alternative to Mayor Jim Kenney’s suggested soda tax, she sponsored legislation today that would establish a “healthy beverages tax credit.” And, in a way, that would make her container tax kind of like a soda tax.

Reynolds Brown’s tax credit would encourage food stores, delis, pharmacies and other merchants to stock more healthy drinks — ones that don’t contain sugar-based sweeteners like high-fructose corn syrup. The credit would be some portion — the rate isn’t set yet — of the difference between what merchants spend on healthy beverages one year and the greater amount they spend the next year. And it would be applied against their business taxes.

So, say your corner store spends $75,000 on healthy drinks one year and $100,000 on healthy drinks the following year. It could claim a tax credit worth X percent of $25,000. The total credit would be capped, also at a figure that hasn’t been set in the legislation yet.

What does it all mean? When Reynolds Brown introduced the container tax, she said she did so because it would be more fair. Her theory is it would hit people who drink imported mineral water and kombucha as much as it would hit people who drink Mountain Dew and Coke. But Reynolds Brown realized that from a policy perspective, she wants to encourage people to drink more healthy drinks and fewer unhealthy drinks.

Reynolds Brown’s office said she introduced the tax credit because of concerns raised in a hearing Wednesday by Councilwoman Maria Quiñones-Sánchez, that corner stores in her district stock little other than sugary drinks. The tax credit would encourage those stores to diversify their inventory and offer more healthy options, said Hadji Maloumian, the legislative director for Reynolds Brown.

But a container tax plus a healthy beverage tax credit would be somewhat like a more complicated soda tax. If Kenney’s proposed soda tax passes, anyone who buys soda will pay three cents more per ounce, assuming that distributors pass the full cost of the tax onto consumers. If the container tax and the healthy beverage tax credit both pass, anyone who buys any drink in a bottle will pay 15 cents more per bottle (again, assuming that distributors pass the tax onto consumers), but the merchants could save a bit of money on the healthy drinks they buy wholesale, which might allow them to lower the cost of those to the consumer.

Round and round we go. Council and the mayor hope to land on a compromise on the budget sometime prior to the last budget hearing of the year, which is scheduled for June 8th. Kenney wants to use a three-cents-per-ounce soda tax to fund expanded pre-K, community schools, and improvements to parks, recreation centers and libraries.

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