Baltimore More Than Doubles City’s Bottle Tax

Published July 16, 2012

Bottled water, iced tea, soda, and juice at Baltimore groceries and convenience stores began costing more on July 1.

City Council members increased the bottle tax from 2 cents to 5 cents a bottle, over the objections of store owners and business groups that say the tax places them at a competitive disadvantage.

The tax means a 12-pack of soda costs 60 cents more in Baltimore than in stores outside city boundaries. A case of bottled water increases by $1.20. Excluded are dairy items and beverages sold in bottles larger than two liters.

Reason to Shop Elsewhere

“For people who live inside the city, it will mean just that many more will shop outside the city, and grocers in Baltimore will sell less,” said Dee Hodges, president of the Maryland Taxpayers Association. “Revenues will go down.”

The two cents a bottle tax was established in 2010. Opponents say there is already evidence that retail sales and government revenues suffer.

“Clearly, the five cents will have a pretty significant impact on local businesses,” said Ellen Valentino, executive vice president of the Maryland-Delaware-D.C. Beverage Association. “We suspect it will fail the city. How do we know that? Because the two-cent numbers are in and they fail city projections.”

Store Sees Losses

Robert Santoni, chief financial officer for Santoni’s Supermarket, said the two-cent tax has led to a $438,000 loss in revenue for his store. He expects more of the same when the five cent tax goes into effect.

“I’ve been on this in Baltimore from the start,” he said, explaining his opposition to the tax stretches back years. Three new grocery stores that have opened within a mile of Baltimore’s border have driven his customers away, he said.

Baltimore Mayor Stephanie Rawlings-Blake proposed the tax increase as part of her Better Schools Initiative to build new schools. City estimates were the extra three cents would bring in approximately $10 million for construction.

Yet one-fifth of Baltimore residents live below the national poverty level, according to U.S. Census Bureau statistics, and concerns are the tax will ultimately hit hardest those least able to pay.

Jobs Lost

Meanwhile, the city’s unemployment rate stands at 9.3 percent. The bottle tax isn’t helping job growth, Valentino said. Shortly after the city imposed its two cents a bottle tax, businesses reported job losses. A Pepsi bottler halted manufacturing in the city.

“This effect will start to be felt right away,” Hodges said. “The bottle tax is a very simple thing. Baltimore is very small geographically. It’s easy to leave Baltimore for a grocery right outside its boundaries.”

Cheryl Chumley ([email protected]) is a digital editor with the Washington Times‘s newest endeavor,