The U.S. Environmental Protection Agency’s (EPA) Water Infrastructure Resiliency and Finance Center, in collaboration with the...
IBWA opposes the provision in House Bill 528 that eliminates sales tax exemption for bottled water
The International Bottled Water Assn. (IBWA) has urged Vermont Gov. Peter Shumlin to continue his opposition to the sales taxes included in the budget proposals recently approved by both the Vermont Senate and House of Representatives. In particular, IBWA has stated its opposition to the current provision in House Bill 528 that would eliminate the existing sales tax exemption for bottled water.
According to IBWA, bottled water is a packaged food product, and as such is currently exempt from sales and use taxes in Vermont; therefore, bottled water should be treated no differently than other food products.
IBWA stated that it is particularly troubling that as the legislature has been debating what products to tax in order to raise revenue, new or increased proposed taxes on candy, soft drinks, dietary supplements, cigarettes and meals have all been removed from the final version of the Senate’s budget package. The association stated that of all the items that Vermont lawmakers could impose a tax upon, they have opted to burden only the healthiest — bottled water.
According to IBWA, such an approach to levying taxes ignores the benefits of bottled water and creates an incentive to purchase items often associated with an unhealthy lifestyle. The association believes that a tax on bottled water and not on these other items sends a message to Vermonters that bottled water is a poor choice but candy, soft drinks, dietary supplements and cigarettes are acceptable to purchase and use on a regular basis.
In addition, Vermont participates in the Streamlined Sales and Use Tax Agreement (SSUTA). If Vermont enacts a tax on bottled water, it will be the only state in the U.S. participating in SSUTA collecting a sales tax on bottled water but no other food products. According to IBWA, Vermont would have to adopt a confusing and convoluted SSUTA definition for bottled water in order to tax it without taxing other food products. In fact, beyond traditional bottled water, this tax, under the SSUTA bottled water definition, would appear to include all zero-calorie flavored water, sparkling water, seltzer water, fruit water, vitamin water, and perhaps even some zero-calorie “sodas” depending on how they are formulated. IBWA said that it is concerned that legislators are not aware of the numerous water-based beverages, which would now be subject to the state’s sales tax.
IBWA reported that a tax on bottled water would be extremely regressive and affect those who can least afford it, such as the elderly and others on fixed incomes. The association also stated that taxing bottled water also would establish an unfair and inconsistent source of revenue for government funding. Once a tax is applied, sales of these products will diminish and revenue estimates based on prior sales rarely take that into account. A tax on bottled water would inevitably impact sales that would hurt retailers on the borders of Vermont and small businesses that would struggle to compete with larger establishments, IBWA said.