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  • Outside the Beltway: Pepsi Cans Baltimore Plant in Face of Sin Tax

    Remember the Pepsi Challenge? All across America in the 70s and 80s, Pepsi held blind taste tests to prove that Americans prefer its soda pop to Coca-Cola. Now Pepsi faces its own challenge and a choice. Would it rather do business in a city that slaps “sin taxes” on its product or move to a friendlier clime? Guess which choice it made.

    Last year, the Baltimore city council passed a 2-cent tax on bottled beverages. This week, Pepsi decided to cease manufacturing at its Baltimore plant and lay off 77 workers while continuing production in the rest of the state. The Baltimore Sun reports that the city’s tax is partially to blame:

    While retailers have said they feel the brunt of the beverage tax, Pepsi officials said the levy also affects manufacturers and distributors, and signals an unfriendly business environment. As sales for retailers decline because of the tax, they buy less from the manufacturers, Pepsi spokesman Mark Dollins said.

    “When we’re looking at where to do business … we look at what we believe is an environment where we can invest and production lines where it makes the most economic sense,” Dollins said.

    Pepsi considered other factors in addition to the tax in making its decision (such as streamlining operations), but as spokeswoman Kristine Hinck said, “Given the climate, making a beverage in a city where there is a beverage tax certainly doesn’t help.”

    And there’s the rub. Just as city councils have choices on how to plug holes in their budgets, companies have choices on where to do business. But Baltimore isn’t alone. Cities, states and even Congress slap “sin taxes” on things like candy, fast food and tobacco because they’re a way to close budget holes and fund more spending while taking a swipe at politically incorrect consumer goods. But guess what? They have consequences, and not just on a local level.

    As Heritage’s Curtis Dubay writes, companies in the United States will soon be hit with the highest corporate tax rate in the world, which is driving businesses and jobs to other countries. Dubay recommends that Congress “lower the rate so it is equal or below the 25 percent average of our competitors.”

    Just as Pepsi fled Baltimore, other companies could make the choice to flee America and take manufacturing jobs right along with them.

    Posted in Ongoing Priorities [slideshow_deploy]

    13 Responses to Outside the Beltway: Pepsi Cans Baltimore Plant in Face of Sin Tax

    1. Dr BearClayborn says:

      Although I may not drink Pesi I applaud their decision to negate the onslaught of political correctness that is destroying our nation inside and out. Business is business, and if my business were threatened or forced to accept a standard issued by poor municipality management that is deemed detrimental to my product expansion then the result is for me to pull my business and relocate. This actually happened to my business company, in which the local government was incapable of balancing their budget and begin forcing frivolous additional business taxes upon companies. The results were I moved my company to another city and the irresponsible city which I moved from went into bankruptcy [ever heard of Vallejo California?]. Today in America there is a socialistic approach to solving problems. The problem with that is we are still based on a capitalistic format that is driven by private industry. Socialism or over reaching legislation on private businesses does not equate or go together. Therefore companies and corporations are venturing into the new world economies of India, China, Brazil, etc…. America does not know how to do business anymore and the signs of the time for poor business support are showing everyday. Political correctness and irresponsible bureaucrats will be the destruction of this capitalistic society. We all love money and want to make a profit but destroying the foundation it’s based on is plain ignorant. The going trend now is to have incapable people in leadership making ignorant decisions of redistributing wealth. We have a clear cut example of that on our current federal level of administration. Placing undue taxes on businesses only leads away productive entities that can produce economies of scales that all can benefit from. We’re living in a dumb business minded society with a socialist agenda. This will not work for America to continue to stand in the global economy, or even stand on its own two feet.

      Dr BearClayborn
      http://www.glasslipstalking.info http://www.americancoloringbook.info http://www.greatwallamerica.wordpress.com

    2. Pingback: » Financial News Update – 1/11/11 NoisyRoom.net: The Progressive Hunter

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    4. Bobbie says:

      Political correctness isn't freedom. It's force discipline. It's discrimination. It's for some peoples' special interest who have an extreme lack of tolerance. With extreme lack of personal strength.

      Pepsi did the right thing. There is no reason for these taxes, but to destroy the ability to conduct business freely. If the government is any part, hopefully the laid off will ask why government wants to impose increase tax that create such hardships.

      The government is creating more hardships than they're creating jobs.

    5. Bobbie says:

      correction please:

      the government HAS BEEN creating more hardships than jobs.

      It's not fair to the new majority to put them in with what the previous majority left.

    6. George Colgrove, VA says:

      Good going Pepsi. I love Coke, but at times I will drink a Pepsi. Now if you can get rid of your Obama logo and return to something more like your classic logo, we will be even happier.

    7. Dennis Georgia says:

      This is a CLASSIC EXAMPLE OF SOCIALIST GOVERNMET, THESE PEOPLE WANT TO STOP THE SALE OF ANYTHING THEY DEEM TO BE A "SIN" OR BAD. tHEY FIRMLY BELIEVE THAT A TAX SUCH AS THIS WILL TAKE CARE OF THE PROBLEM.

    8. TiltedTalkDomagoy - says:

      Pepsi doesn't make any sense to me. They're against a sin tax on soda, but they are one of the few corporations that joined that alliance to push for such policies as Cap n Trade to stop man made global warming. How can a 2-cent tax be a bad business climate, but de-developing America through carbon taxes of some sort isn't?

    9. Gary - Eagle, Idaho says:

      Bravo Pepsi,

      A reasonable and logical move. Government imposition on U S Business is doing more to discourage employment than to encourage.

      Those in power who believe it is their elected responsibility to control and direct the future of society and business to meet their personal preferences. That kind of tax, tax, tax thinking runs rampant through this country, from federal to state of local government. Unfortunately, too many productive thinking people have no interest in entering the political fieldto replace the idiots. It is up to the voters to recognize the need to change the methods of "doing government".

      Idahoans would love to see Pepsi come our way with some of their production. Idaho is way more conservative in its thinking and has been for decades. Bravo Pepsi!

    10. Leon Lundquist, Dura says:

      It is with Sin Taxes I explain how the poorest people pay the greatest percentage of their Income in Tax. Poor people start with less money, the poor people consume a greater proportion (you can only smoke so many cigarettes, only drink so much, etc.,) person to person so it must be a greater portion of the poor folks disposable income. Add this to the fact that the consumer pays all those Pass Through taxes, a greater proportion of poor people's money is taken by them (poor people spend it all!) The Fines, Fees and Penalties hit the poor more, they doubled and then redoubled the Fines to "Make the rich pay attention!" But there are more poor people getting Fined, there are more poor people.

      The truth is not generally known, the poor people do pay taxes! Price setters pass their tax down. People who never earn any money don't pay taxes, the people who pay them free money pay their taxes too. The people paying the highest percentage of taxes are the Working Poor. Why not make this Transparent?

    11. cc, harpers ferry, w says:

      We own property in Baltimore. Every time we turn around there is a tax for this tax for that, check for lead paint again and again that hasn't been produced for 40 years! We fix up houses really nice and people trash them, put holes in all the walls, run drug shops. Then leave their junk after not paying rent for months and months. Impossible to evict!

      I can't wait to get out of there..it's becoming like Detroit. I've lost hundreds of thousands of dollars and fighting bankruptcy.

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