Mario H. Lopez State beverage tax would hurt economy
Like a lot of supposedly well-meaning attempts by politicians to exert more control over products that they don’t like, Gov. Ned Lamont’s recent proposal to impose the country’s first statewide beverage tax is doomed to backfire. In fact, a beverage tax will damage Connecticut’s ability to keep jobs in the state as families are already dealing with the high cost of living in Connecticut.
The reality is that a regressive tax like a beverage tax will only make things worse economically, especially for people working paycheck to paycheck and small businesses who are working to keep their doors open and their employees gainfully employed. If the governor and legislators are trying to do what is best for Connecticut’s residents, their economic priority should focus on improving job opportunities, not shipping them out of the state.
The largest impact of this tax will be seen in the thousands of small businesses that compete with stores on the other side of the state line, including grocery stores, restaurants, corner stores, bodegas and movie theaters. While the proposed tax is bad for all consumers, people in underserved communities will be hit especially hard since much of these working-class communities rely on these neighborhood businesses for their livelihood.
Connecticut sadly has the third-highest rate in the country of people moving out of the state. The reason? A lack of job opportunities. The proposed beverage tax will make the situation worse. As we’ve already seen in other places such as Philadelphia, these types of burdensome laws prompt consumers to shop across state lines — and while the catalyst comes from higher taxes, once consumers are out of state, they will do the rest of their grocery shopping.
In Philadelphia’s case, an estimated 1,200 jobs were lost in worker layoffs and cuts in work hours, including for blue collar workers — folks who work in the grocery stores themselves or are truck drivers, for instance. In addition to the job losses, this tax will disproportionately affect lower-income families who already struggle to make ends meet. While higher-income individuals will be able to shrug off the tax, families living paycheck to paycheck will feel the pinch in their pocketbooks. If Connecticut lawmakers are looking for ways to increase revenue, the funds should come from broad-based approaches that don’t just target the state’s most vulnerable populations.
One example of underserved communities bearing a disproportionate share of the burden of taxes like what Gov. Lamont wants to impose on consumers of certain beverages is Connecticut’s growing Hispanic population. Connecticut has among the highest rates of Hispanic unemployment in the country and Gov. Lamont’s beverage tax would only exacerbate this problem.
The governor and like-minded allies should rethink his proposal to increase all forms of harmful taxes, and especially should reconsider proposals like the beverage tax that disproportionately harm underserved communities. There is already an alarming trend of residents being priced out of the neighborhoods that they’ve lived in for years because of price increases, the higher cost of living and fewer jobs. A state beverage tax will only make things worse.
Mario H. Lopez is president of the Hispanic Leadership Fund, a public policy advocacy organization that promotes liberty, opportunity and prosperity for all Americans.