April 27, 2010
Their big rush messed up the soda-pop tax

When you pass the final budget of many pages in a big rush violating your own rules - no time for it - you sometimes get something wrong. The soda-pop tax.

Don't you just feel sorry for our legislature? They work so hard for so long that they just can't take time and energy for hearings on the details of the budget. They can't even let it be on the shelf long enough for all their members - or the public! - to read it.

They went to extraordinary lengths this session to avoid even the normal daylight in the process. They held hearings with a few hours notice when the text of the bill was not available, violating Senate Rule 45. They scheduled hearings when the bill text was not available before the hearing began. They held the hearing for a bill that hadn't been introduced.

SB 6835 was passed with only a title, no text, by the Senate Ways and Means Committee on February 9. Jason Mercier at WPC (pdf) This link details several of these actions.

And they passed an amendment to a nonexistent law. EFF WA Heroic, eh?

But this is inside politics, they say. No one will notice. What could possibly go wrong?

They messed up one - so far - of their beloved tax increases. The soda pop tax proposal brought cries of pain from the in-state industry. So they were exempted. Supposed to be. But our Democrat leadership - aren't they smarter than us? - didn't know enough about the industry to properly exempt our industry and the final budget does not.

Just one hearing would have disclosed the problem.

After the budget was passed, but before it was signed, the error was discovered. Even House leader Frank Chopp asked Christine Gregoire to line-item veto this tax.

Gregoire signed the budget Friday without vetoing the pop tax. After all, it would cut $38.1 million in revenue and another $35.3 million if it also affects bottled water.

Washington State Wire.com has the details:

Bottlers rushed to the Capitol the moment they sensed danger. They staged a rally on the Capitol steps the final Saturday of the session, and the hundreds of blue-shirted Pepsi employees and red-shirted Coca-Cola workers for once outnumbered the green and the purple shirts of the state employees. ...

House Majority Leader Lynn Kessler, D-Hoquiam, came out to the Capitol steps and told the crowd that lawmakers thought their jobs were important. She said they'd found a way to help the mom-and-pop bottling operations around the state. Just two hours before, House and Senate negotiators had released the final version of their tax bill for public inspection, and it contained an exemption written especially for them. Every bottler would be exempted from tax on the first $10 million in sales.

The House passed the bill a few hours later.

All's well that ends well, right?

Just one problem. Most of the small bottlers don't actually do any bottling. No one in the Legislature knew.

So the tax hits the local industry.

This is just one cost of our Legislature intentionally removing their process's transparency. What other costs? The trust of the public...

Posted by Ron Hebron at April 27, 2010 08:12 AM | Email This
Comments
1. Epitomizes the acronym SNAFU, as we used to say in the military. :)

Posted by: Duffman on April 27, 2010 08:40 AM
2. The whole idea of an exemption for local distributors or bottlers makes no sense. Why should one bottler/distributor get an advantage over another? There's a lot more silliness in the article you link to as well. Why will retail prices automatically go up by $1 rather than 48 cents a case? Cases aren't all priced at even dollar amounts now. And if they do round off, perhaps they won't raise prices at all. And if they do, the difference should cause only a tiny shift from major brands to store/generic brands, whose price advantage will remain the same as it is now in absolute terms and actually decrease in proportional terms. And anyway, don't sales of store/generic brands contribute equally to the economy?

I'm not sure how I feel about the soda tax, especially since it includes diet soda. But if we have one, it shouldn't discriminate among brands, manufacturers, bottlers, distributors, retailers, etc. I can't blame the local "bottlers" for asking for a special break, but they don't deserve one.

Posted by: Bruce on April 27, 2010 08:46 AM
3. Duffman: I think BOHICA would also apply in this situation.

Posted by: mike336 on April 27, 2010 08:53 AM
4. #3...indeed! Portends the saying 'thank you Sir, may I have another' :)

Posted by: Duffman on April 27, 2010 08:57 AM
5. Taking incompetence to a whole new level, I’d say!
On a more serious note, I am really beginning to wonder if our politicians in this state are really aliens from another planet.
My circle of friends, which I believe represent a broad spectrum of society, are fed up with current conditions.
My question is what are others thinking about the state of affairs, and I am not talking about some of the personal lives of the political proletariat that have been elected.
And what are they going to do about it.
I say we need to organize, and ideas where to go?

Posted by: Yo Yo its meo on April 27, 2010 09:00 AM
6. Bruce "Why should one bottler/distributor get an advantage over another?"

You're starting to sound like a conservative.

This reminds of the Waxman disaster also, and of the news that the White House buried its own report that says how Obamacare will increase health care costs more than if it hadn't passed, until a month after it passed.

Posted by: Gary on April 27, 2010 09:05 AM
7. #5
Here's an organization that has a new twist on it.

Posted by: Duffman on April 27, 2010 09:07 AM
8. @1 Duffman on April 27, 2010 08:40 AM

I'd say more like a CF or FUBAR.

Posted by: James on April 27, 2010 09:07 AM
9. By the way... soda tax? Stupid as hell. Diet or not.

Posted by: Gary on April 27, 2010 09:08 AM
10. #8 haha...Yeah in the Vietnam days of the 'ol 4/12th Cav we altered that a bit (FUBAR)...in regard to our choppers the last two letters we called 'always running'. :)

Posted by: Duffman on April 27, 2010 09:15 AM
11. Bruce "Why should one bottler/distributor get an advantage over another?"

The exact same thing could be said about income.

Isn't making the first $10 mil in sales exempt from this tax the same as saying that the first (whatever your standard deduction is) of personal income is exempt from income tax?

Why do you say it makes no sense for this tax but you don't seem to have a problem with the same thing when it comes to income tax?

Posted by: Ken on April 27, 2010 10:06 AM
12. Not that I drink much soda now, and with the quality of our mountain water, I've never understood the need to buy bottled water. But I'm going to go out of my way to avoid all soda pop. Hopefully others will follow suit. It's already ridiculous to be charged a dollar from a vending machine for a 12 oz pop. I remember just a few years ago when Safeway had generic brand pop for 25 cents a can. Voters need to send small messages every way they can. When voters and businesses feel enough pain, they will start to question decades of Democrat control.

Posted by: Jeff B. on April 27, 2010 10:15 AM
13. "I'm not sure how I feel about the soda tax, especially since it includes diet soda. But if we have one, it shouldn't discriminate among brands, manufacturers, bottlers, distributors, retailers, etc. I can't blame the local "bottlers" for asking for a special break, but they don't deserve one."

So Bruce, since you think there should be no exemptions, I am curious about the exemption of unions from having their "cadillac health plans" taxed while it is imposed on everyone else.

Where are your howls of protest over that one?

Posted by: pbj on April 27, 2010 10:17 AM
14. Jeff, and do you know what Olympia's solution to people *not* buying the soda will be, don't you? The idiots will come to the conclusion that they need to raise the soda tax even higher.

Posted by: Gary on April 27, 2010 10:19 AM
15. PBJ, (a) your question is off-topic, and (b) I never said I believe in "no exemptions" of anything in the world. That would be a ridiculous statement for someone to make.

However, I looked up the union exemption on Cadillac health care plans, which I'd never heard of before. As I understand it, unions feel it's unfair that they negotiated multi-year agreements based on one set of rules and now the rules are changing. That makes some sense; although the rules are changing for everyone, unions with multi-year agreements can't adapt as easily as other parties. The articles I found online say the exemption applies until 2018, but it's not clear whether this means all union healthcare won't be taxed until 2018 (which seems too generous), or just plans that were bargained for prior to the enactment of the healthcare bill (which is imperfect but I can see being part of the inevitably political process).

If the Republicans had sincerely tried to compromise on healthcare reform, the Democrats would not have been forced to cater to special interests like this to avoid a filibuster. That's not to blame the Republicans for a bill they didn't vote for. But if you don't participate in the process, you can't expect a say in the final bill.

Posted by: Bruce on April 27, 2010 10:42 AM
16. Bruce,

With all due respect...you're full of crap. : )

Posted by: Jack on April 27, 2010 10:50 AM
17. #15 "But if you don't participate in the process, you can't expect a say in the final bill."

Oh.

Posted by: Gary on April 27, 2010 10:52 AM
18. #15 "But if you don't participate in the process, you can't expect a say in the final bill."


And if you are locked out of the process??? By "participate" you mean capitulate. Sorta like Poland "participated" in its reorganization by the Nazi's in WWII.

So basically when it suits your political ends you are all for specials treatment like the $300 million Louisiana purchase. You are a hypocrite!

Posted by: pbj on April 27, 2010 12:01 PM
19. "But if you don't participate in the process, you can't expect a say in the final bill."

I think you meant to say:

"But if you are not invited to participate in the process you can't expect a say in the final bill."

That would be more accurate.

I hope you will be as magnanimous if the shoe ends up on the other foot.

Posted by: eyago on April 27, 2010 12:01 PM
20. pbj, you asked: I am curious about the exemption of unions from having their "cadillac health plans" taxed while it is imposed on everyone else.

That exemption does not exist in the health care bill signed into law by President Obama. It was, in fact, never in any piece of legislation nor any amendment passed during the entire health care debate.

Posted by: John Jensen on April 27, 2010 12:31 PM
21. Well I'm angry with them for upping the service B&O tax a whopping 20%! I wonder why they didn't raise their own taxes (real estate, for instance) 20%?? Did they think only OTHER people deserve a tax increase???? Legislature, you ought to run the state more efficiently instead of punishing taxpayers who are already paying way more than everyone else to run this place with yet more taxation. Shame

Posted by: Michele on April 27, 2010 01:03 PM
22. John Jensen -

ANSWER THE QUESTION YOU HAVE DODGED FOR 8 months! Did you serve your nation's military? I asked you this when you came to the defense of terrorist Hassan that gunned down the soldiers at Ft Hood.

ANSWER THE QUESTION!

Posted by: PBJ on April 27, 2010 01:34 PM
23. 10. #8 haha...Yeah in the Vietnam days of the 'ol 4/12th Cav we altered that a bit (FUBAR)...in regard to our choppers the last two letters we called 'always running'. :)

Posted by Duffman at April 27, 2010 09:15 AM
+++++++++++++++++++++++++++++++++++++++++++

Old Huey's, they never let you down. Even full of holes.

Posted by: Medic/Vet on April 27, 2010 01:57 PM
24. I rarely drink pop thank goodness!I am going to keep things this way!

Posted by: Laurie on April 27, 2010 03:00 PM
25. This is easy, I just won't buy any more of everything they tax, that will sure help business in those industries!

Posted by: GS on April 27, 2010 05:07 PM
26. It's one of the joys of living across the river from Oregon.

Posted by: Hinton on April 27, 2010 05:32 PM
27. "26. It's one of the joys of living across the river from Oregon."

Hinton, You aren't suggesting on a public forum that you are breaking the law by not paying the tax on things you buy out of state, are you?

From the Washington Department of Revenue website:

"
When is use tax due?

Use tax is due if:

* Goods are purchased in another state that does not have a sales tax or a state with a sales tax lower than Washington’s. For example, items you purchase in Oregon that are used in Washington are subject to use tax.

How do I pay use tax?

Use tax is determined on the value of the goods when first used in Washington. Generally, this is the purchase price. However, a depreciated value may be determined if the goods are used outside the state for a lengthy time before use in Washington by the same person. As of June 1, 2002, use tax is also due on any freight, delivery, or shipping charges paid to the seller.

The state tax rate is .065. Local rates vary depending on your location. To determine the correct rate for your area, check out our Local Sales Tax Rates or try our Tax Rate Lookup Tool. Use tax, unlike sales tax, is due at the rate where you first use the article, not where the sale takes place.

To pay use tax

* Online: Try our free, secure online application. It guides you through simple filing steps and gives you several payment options.
* By paper: Complete and mail a Consumer Use Tax Return. (pdf)"

Posted by: Calvin A on April 27, 2010 06:11 PM
28. I think we should have a Pre pop chucking tax party down in Olympia, see how far and how accurate we can chuck those cans.

Posted by: gs on April 27, 2010 09:56 PM
29. Does anyone know what the ratio of sales of diet soda to sugar containing soda is? It seems to me that most people I know drink diet.

I thought the purpose of the tax was to reduce obesity ...

Posted by: Borderland on April 28, 2010 07:45 AM
30. Borderland@29, it appears that diet soda makes up about 30% of the US soda market. As a contributor to that 30%, I don't like the soda tax. In most/all other places where they've instituted a soda tax, it's only on sugary soda. I suspect part of the reason that WA included diet soda was that they wanted to tax bottled water for environmental reasons, and it would seem arbitrary to tax water but not diet soda. I'm not entirely happy with this, but I figure the state needs the money (I know a few folks around here may disagree with me on that) and the overall effect on behavior will be positive.

Posted by: Bruce on April 28, 2010 08:19 AM
31. Bruce@30, Thanks for the information. I'm torn over the question of money for the state. They obviously need more funds as they have badly mis-managed the state budget. Sadly, I have no confidence that if they gather more funds they will use them wisely. I fear that the extra funds will disappear into the general fund and next year we will find ourselves in deeper debt.
Thanks again for the information.

Posted by: Borderland on April 28, 2010 08:41 AM
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