Published: Saturday, February 27, 2010
GUEST COMMENTARY / STATE BUDGET
Beverage tax could cost good-paying jobs
Harbor Pacific Bottling, Inc., which my father started in 1957, is home to 45 hard-working employees, including many who have been with the company for decades. If the governor’s proposed excise tax on soda pop 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:
n 14 times more than what my company pays in Labor and Industries (L&I) tax.
n 54 times more than the unemployment insurance tax we pay.
n 7 times more than our B&O (business and occupation) tax.
n 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.
Harbor Pacific Bottling, Inc. is not alone. It’s the same situation for the other bottlers, who collectively employ nearly 3,000 workers statewide in good-paying jobs with generous benefits, and indirectly support another 17,000.
As president of the Washington Beverage Association, I know 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 trying to weather a very difficult economic time, we know that singling out individual industries is not only unfair, it will inevitably cost more in lost jobs than revenue generated.
Local soft drink and water bottlers are major contributors to the communities in which they do business, both charitably and economically. All of our members’ businesses are very public participants and contributors to a myriad of community programs and organizations. Furthermore, for every one beverage industry job, nine more are created in affiliated businesses and industries. In all, the beverage industry has a total economic impact in Washington of $8.6 billion.
In talking with bottlers from 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 bottlers 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.
And it is not just the bottlers.
Small retailers such as mom-and-pop stores, whose sales already have dropped and are struggling to stay afloat, will be especially hard hit by industry-focused excise taxes because they carry many of our products and depend upon these sales for their livelihoods.
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., a family-owned business in Elma, Grays Harbor County.
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:
n 14 times more than what my company pays in Labor and Industries (L&I) tax.
n 54 times more than the unemployment insurance tax we pay.
n 7 times more than our B&O (business and occupation) tax.
n 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.
Harbor Pacific Bottling, Inc. is not alone. It’s the same situation for the other bottlers, who collectively employ nearly 3,000 workers statewide in good-paying jobs with generous benefits, and indirectly support another 17,000.
As president of the Washington Beverage Association, I know 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 trying to weather a very difficult economic time, we know that singling out individual industries is not only unfair, it will inevitably cost more in lost jobs than revenue generated.
Local soft drink and water bottlers are major contributors to the communities in which they do business, both charitably and economically. All of our members’ businesses are very public participants and contributors to a myriad of community programs and organizations. Furthermore, for every one beverage industry job, nine more are created in affiliated businesses and industries. In all, the beverage industry has a total economic impact in Washington of $8.6 billion.
In talking with bottlers from 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 bottlers 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.
And it is not just the bottlers.
Small retailers such as mom-and-pop stores, whose sales already have dropped and are struggling to stay afloat, will be especially hard hit by industry-focused excise taxes because they carry many of our products and depend upon these sales for their livelihoods.
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., a family-owned business in Elma, Grays Harbor County.
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