City grocers urged Baltimore officials to repeal the two-cent bottle tax last week, saying the charge drive cash-strapped shoppers to county businesses. At a press conference Dec. 2, retailers said city stores had seen a 4-7 percent decrease in sales since the tax was enacted last July.
Sandy Vary, co-owner of Bel-Garden Bi-Rite Supermarket in Gardenville, said her store’s beverage sales are down 7 percent and overall sales by 5 percent. She had to lay off five of her 90 employees because of slow business, she added. The latest came last month. “If the goal is to drive small businesses out, they are right on track,” she said at the press conference.
Vary said grocers are not allowed to post signage informing customers about the “hidden” tax. Those aware of the measure are vocal against it, she said, or choose to shop outside of the city’s borders.
“When I have to raise a couple of pennies that is a reason to go somewhere else,” she said. “We know customers that make the trip out of the city … Our margins are based strictly on food … We can’t make it up on other items like Walmart; we have a smaller footprint. We have to give them a real reason to shop in our stores.”
To ease strains on customers, some grocers, like Rob Santoni, have resorted to absorbing the tax and keeping prices flat for customers. But he says beverage sales at his supermarket in Highlandtown still lag by 4.8 percent, and compared to last year, 2-3 percent fewer customers enter his store.
“Those that know the tax went into effect; they aren’t even giving me a chance,” he told reporters. “They aren’t shopping in the city … It’s hard when people see so much irresponsible spending in local government … who ignored the outcries of business leaders to not pass it.”
Officials say the tax is necessary to shave down the city’s $121 million deficit and sustain the city’s general fund, which supports police, fire officials and public education. “The bottle tax revenues are on target,” Mayor Stephanie Rawlings-Blake recently told reporters. “We’ve got $5 million in the city’s coffers for essential services. And when we took this issue to the public, they were very comfortable with two cents.”
Rawlings-Blake proposed a four-cent beverage tax last spring, but a divided City Council compromised with a two-cent tariff July 25. Retailers and bottlers, including Santoni and Vary heavily protested the three-year charge. It applies to soda, bottled water and other drinks, but excludes milk and beverages over two liters.
The city has collected $5.3 million from the tax to date, receiving over $430,000 in the first month of ratification. Officials expected to bring in $5.8 million by January. Mayoral spokesman Ryan O’Doherty said the city will make up for the slight shortfall this month when they begin an audit and enforcement program to ensure that all city retailers implement the 2-cent increase.
“As more distributors come into compliance and enforcement efforts are put in place, the city could achieve the full revenue projected in the budget,” he said in a written statement.
Santoni says local government should be “allies” for city businesses and promote competitiveness. “I think it’s another way five million dollars can be found,” he said.
“Until they walk a day in our shoes,” he added, referring to Rawlings-Blake and city council members, “they won’t understand.”
In 1989, Baltimore City and county shoppers faced a four-cent beverage tax. It was later repealed after strong objections from residents and grocers. “This is a rehash of what happened before – déjà vu, but it didn’t work then and it’s not working now,” said Jeff Zellmar, head of government affairs for the Maryland Retailers Association.
He says anti-bottle tax petitions are circling city supermarkets. With a goal of 15,000 signatures by spring, grocers plan to pressure officials to repeal the tax. Three days after the news conference, 2,035 people had signed the petition, according to the “Stop the Baltimore Beverage Tax” website.
“Everything else is going up; the economy is going down and we are hanging by our fingernails, Zellmar said. “Two cents means a lot.”