Nestle Waters has criticised a plan to introduce a tax on locally-produced bottled water in Michigan to help authorities pay for education grants.

Michigan Lt Governor John Cherry has proposed a US$0.1 bottle tax on bottled water produced within the state. Proceeds would be used to fund a student grant scheme under pressure due to the state authorities' tight finances.

The plan has drawn a strong rebuke from Nestle Waters, which owns Michigan-based Ice Mountain bottled water company.

"A 10-cent per bottle tax on Michigan manufactured products nearly doubles the price for consumers, and would be unsustainable in the highly competitive beverage marketplace," said Brian Flaherty, vice president of government affairs for Nestle Waters.

He indicated that Nestle and others may be forced to scale down their operations in the state.

"The Lt. Governor's proposal will only penalise Michigan employers and risk jobs," he said, adding: "The proposal could also drive some bottlers to supply products from outside the state to remain competitive on the price consumers pay for bottled water products."
Nestle Waters, which employs between 250 and 300 people directly in Michigan, is arguing that the tax plan is unconstitutional because the state's 1974 rulebook states that food products must be exempt from sales tax.