Hasn't anyone ever told New York Governor David Paterson to let the dead rest in peace? I guess not. Paterson can't seem to let go of his bad idea to impose a new tax on "sugary beverages." The Albany Times Union is reporting that Gov. Paterson is calling back the State Legislature Wednesday night to finalize the budget and to vote on his proposals to cap property taxes, give more discretion in setting tuition to the state university campuses, and tax soft drinks. Paterson declared the soda tax all but dead only a few weeks ago. While I've heard next to nothing to indicate the mood against a soda tax among New Yorkers has changed, Paterson seems intent on beating the dead horse of a tax again. The arguments I made against it then are just as relevant now.
As I argued in a letter on behalf of NTU's 18,000 members in New York to the State Legislature, the Governor's proposal would raise the price of a two-liter bottle of soda could rise by about 67 cents. I wrote: "An average-size container of powdered drink mix, such as lemonade or iced tea, could cost up to $3.84 more. Since poor families tend to consume proportionally higher quantities of drink mix (because an average container produces as much as three gallons of beverage), the tax increase on sugary drinks will hit this economic segment the hardest." What's more, higher prices for beverages will decrease sales for grocers, affecting everyone from the bodegas in Queens to the Whole Foods in Manhattan to the A&P in Mahopac. Fewer sales means less economic activity in New York, precisely the last thing the state needs now.
Paterson needs to understand that New York's budget deficit is the result of falling revenues; rather, it's the result of overspending. As I pointed out in the letter, "[i]n the past decade, spending has skyrocketed by $35 billion, outstripping inflation by $21 billion and personal income growth by $17 billion. New York now faces a budget shortfall of nearly $10 billion. Additionally, the state has the third-highest tax burden per capita and one of the ten worst business tax climates in the nation." Raising taxes in this climate makes absolutely no sense. As a spokesperson for the State Senate leadership put it: "we want to provide New York families with tax relief, not add to their burden." I couldn't agree more.
Instead of raising taxes on sugary drinks, New York needs to cut its spending to a more manageable level and reform its burdensome tax code to spur economic growth. Although the State Legislature has been called back to Albany, it is not obligated to take up the Governor's proposals. Let's hope that the State Legislature, especially the Senate, does not yield in its opposition to the soda tax.