Guest Viewpoint for Sunday — April 11, 2004

• Disguising a tax increase as environmentally friendly

Disguising a tax increase as environmentally friendly

By Lowell L. Kalapa

Taxpayers should be aware that come January 1st of next year government will take a bigger bite out of your pocket book.

Hey! Wait a minute, you say, the legislative session isn’t even over yet and you haven’t heard of any proposal to raise taxes! And you would be correct! This tax increase was approved two years ago when lawmakers approved Act 176 of the 2002 legislative session. This is the measure that slapped a nickel per container on any beverage product sold in the state beginning January 1, 2005. In fact, you have been paying a half a cent more per beverage container since October of 2002. This is a fee that is paid by the beverage distributor and is included in the cost of the six-pack of soda or beer you bought last week.

This fee will rise to a penny per container beginning October of this year.

Then on January 1st of next year, you will have to cough up a nickel per container or 30 cents extra on that six-pack. Now supposedly you will be able to get that nickel back if you return the empty container to your local store. But wait, before you stomp on that container you should know that the store can’t take back a container on which one cannot read the label that says it is refundable for a nickel, so you better find somewhere you can store all those empties.

Ah, but you will get your nickel back if, of course, you take your empties back to the store. And while that may be true, because someone has to pay for the storage of these containers before they are sent off to the recycler, you will probably end up paying more for your groceries or any other product where you also buy your beverages. Since your local grocer will have to pay another person to handle the returned beverage containers, that cost will be passed on to you – the customer. And if you haven’t washed out that sticky cola residue in the container, the grocer will probably have to hire yet another person to wash out the containers and haul them to the back of the store for storage. So now, the grocer has the labor costs of at least two more employees. And if your grocer is open more than eight hours, double that number at the very least and we are looking at $30,000 to $60,000 in additional labor costs per store.

Speaking of labor costs, let’s not forget that the grocer will have to pay someone to haul the empty beverage containers to the recycler. This is another cost for the grocer that will have to be passed on to you the consumer. A conservative estimate of perhaps 3 million beverage containers returned to a store over a year at a half-cent per container and we are looking at adding another $15,000 to the cost of operating that store.

And what about the scrivener that has to keep track of the number of beverage containers sold as well as taken back. Since the nickel is not taxable to the grocer, an accurate accounting of the number of beverage containers sold as well as the number of nickels given out for the return of those containers is needed to insure that the grocer doesn’t pay taxes on the nickel. Sure, computers will make the task somewhat easier, but the verification and the accounting will add yet another cost to the overhead of the grocer.

And where will the grocer store the empties between trips to the recycler? Building a new store room, which will keep the bugs and rodents away from the containers, will add more costs to operating that grocery store. Adding storage space may be completely out of the question for those min-marts where you purchase your gas.

So where will the grocer get the money to pay for the additional labor costs, administrative costs, transportation costs, and finally capital costs for the building of an addition to the store? That’s right, it will come from you, the consumer, as prices are raised to cover the cost of operating that store. And you thought that box of cereal was already expensive. Thanks to lawmakers, the added cost of operating the beverage deposit program will come out of your pocket and that’s nothing more than another tax on all of us.

Advocates of the bottle bill repeat their mantra that it will clean up the environment. However, even the advocates admit that beverage containers account for less than 5% to 7% of the waste in our landfills.

However, it will not only cost you an addition nickel per container, which you may or may not get back, but it will cost you more for all of your groceries because your favorite grocer will have to pass the cost on to you in order to stay in business. It is a cost that you will have to pay, like it or not, a beverage drinker or not. And that’s why it is a tax for which you can thank your lawmaker!

Lowell L. Kalapa is the executive director of the Tax Foundation of Hawaii