Soda Tax RIP

In what was almost inevitable since the public outcry-and industry-led lobbying effort-was started over the governor's proposed soda tax, it was announced yesterday that the tax on sugared soft drinks had fizzled: "Gov. David Paterson is poised to announce a three-way agreement between himself and majority legislative leaders to ditch many of the so-called "fun taxes" he proposed as revenue generators in his 2009-2010 budget, lawmakers briefed on the plan confirm. The soda tax (AKA the "fat tax"), which Paterson all-but declared dead not too long ago, despite a valiant YouTube defense mounted by DOH Commissioner Richard Daines, will now be officially confined to the recycling heap, along with the ever-unpopular "iPod" tax that would have applied to all digital downloads (including porn)."

As we had pointed out in our posts, and in a well publicized press conference, the tax hurt poor consumers along with the store owners in low income neighborhoods. As we said at the time, when it looked as if Paterson was about to cry uncle: "Opponents of the soda tax — which Mr. Paterson and his aides preferred to call a tax on obesity, which afflicts a quarter of New Yorkers — said they were glad that Mr. Paterson appeared to be abandoning it. “The governor is responding to the obvious hue and cry, not only from the food and beverage industry people, but from the general public, who have shown in poll after poll that this is not an idea that they feel is worth embracing,” said Richard Lipsky, a lobbyist for the beverage industry."

Still, can we at least say that this victory is a sweet one? Especially for the small Hispanic bottlers such as Good-O, Inca Kola and Top Pop; folks who would have been hard pressed to absorb the increase during these tough times. As Luis Jardines, owner of Inca, told El Diario-emphasizing the tough economic conditions: "Por su parte, Luis Jardines, de la distribuidora de Inca Kola, dijo que “es triste que, en estos momentos críticos, en que cada día se pierden miles de empleos, se quiera poner un impuesto adicional a un producto que consume el pueblo”.

Clearly, the unpopularity of both the tax-as well as the governor himself-played a role in the jettisoning of the soda levy. The City Room blog captures this: "With budget negotiations proceeding at a crawl and his approval ratings in the gutter, Gov. David A. Paterson announced a deal with the Legislature on Wednesday to use more than a billion dollars in federal stimulus money to eliminate some of the unpopular new taxes and fees he had proposed to help balance next year’s state budget."

Next up, the bottle bill-with support for the measure waning in the state senate; the razor thin Democratic majority makes this a difficult sell. As the NY Times points out this morning: "Everything has broken down,” said one Democratic lobbyist, who insisted on anonymity to protect the interests of his clients. “The reason is that the Senate can’t produce — they can’t generate votes for taxes, for Rockefeller drug law reform, for anything.” At the same time, it is clear that many in the legislature feel that it's not the time to foist regulatory burdens on struggling retailers; and, surprise, we agree.