A new industry report has highlighted the negative economic impact of snack taxes on the economy, industry and consumers.
The US Grocery Manufacturers Association has suggested that snack taxes require complicated definitions of the tax base, in addition to compliance costs. Moreover, distinctions between products can be arbitrary: taxing granola bars but not trail mix, potato crisps but not pork rinds. Small businesses face administrative burdens up to six times larger than those for large retailers, the GMA added.
The report concluded that a tax on snack foods is more regressive than a general sales tax, since households with incomes below US$10,000 spent 11% of their income on snack foods in 2004, compared to 1% for households earning more than $70,000.
“The findings from this report are further evidence that snack taxes are arbitrary, discriminatory, regressive, and inefficient to collect and administer. It’s no wonder that most states that enact a “snack tax” end up repealing it, given the fact that governments are unable to rely on the tax as a predictable stream of income because consumers and retailers are confused over what items are taxable,” said Mary Sophos, GMA senior vice president and chief government affairs officer.