Seattle’s coffee shops will not be the source of a solution to the city’s under-funding problems. Voters refused to accept targeted taxation on espresso following a successful campaign by opponents of the scheme. However, food and drink manufacturers should expect more robust taxation proposals in the future.
Nearly 70% of Seattle voters have opposed a proposal by their city council to tax espresso-based drinks. The extra 10 cents on a cup of espresso coffee, typically costing US$2-$4, was intended to bolster the pre-school and day-care programs to the tune of US$3-7m per year. Such financial support is increasingly necessary at a time when city budgets are being cut back.
Supporters claim it is a fair tax on a luxury item and that people who spend up to $5 for coffee can surely spare the extra dime. Meanwhile, coffee shop owners have been fearful of the cumbersome tracking and accounting burdens. Starbucks, which has more than 70 stores in Seattle, put forward nearly US$50,000 of the US$165,000 raised to campaign against the measure. The campaign’s advocates raised US$129,000.
Seattle is a city renowned for its liberal values and many had hoped that its citizens would support a drive to help the poorest children and families in the community. Yet in the event, voters baulked at the idea of setting an important precedent. The outcome of the case has ramifications well beyond the city of Seattle. In the hope of raising money for the fight against the nation’s obesity epidemic, lobbyists across the US have been considering proposals to tax sugar and fat laden food and drinks.
The key to getting such taxes passed is to link a particular product type with a clearly identifiable and directly related cause. The Seattle tax failed because its supporters were unable to demonstrate a sufficiently robust connection between the price of espresso and the solution of the city’s education problems. Such a tax needs to influence consumer behaviour as well as raise money. Food lobbyists take note; food and drink manufacturers beware.
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By GlobalData
