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STUDY PROVES SNACK TAX CONFUSING TO RETAILERS AND CONSUMERS

 ALEXANDRIA, Va., July 15 /PRNewswire/ -- A so-called "snack tax" enacted in Maine two years ago is being met with confusion and frustration by retailers and consumers, according to a study conducted in May by the Snack Food Association (SFA), Alexandria.
 A survey of grocery stores in Portland, Bangor, and Lewiston, Maine, showed a 20 to 30 percent error rate when cashiers were faced with the decision of whether to apply the tax to potato chips, granola bars, walnuts, marshmallow cream, and other items. Errors were made because of the vague definition of a snack and not ignorance of the tax's existence. Potato chips were consistently taxed, but marshmallow cream and powdered drink mix (taxable items) were not.
 "This study shows the difficulty and unfairness inherent in this form of taxation," said SFA Vice President for Government Relations Jim McCarthy. Maine legislators opposed to the tax have already proposed a bill to repeal the regressive and confusing tax.
 Maine isn't the only state that realized that snack taxes aren't the answer to budget woes, according to McCarthy. After a "snack tax" was passed in California in 1991, 1 million voters signed a petition to overturn the tax, which was cited by U.S. News and World Report as one of the 10 worst economic moves of the year. The resulting ballot initiative, Proposition 163, repealed the tax by a margin of 66 to 34 percent. This was the largest victory of any initiative on the California ballot last year.
 "The District of Columbia is currently finding out how confusing and arbitrary its new `snack tax' is," said McCarthy. The District has long taxed food intended for immediate consumption on the premises at 9 percent. In addition, the District recently enacted a 6 percent tax on certain "snack foods" regardless of whether they are intended for immediate consumption or not, effectively broadening taxation of snacks to grocery stores and corner markets that don't tax other types of foods. These taxes are confusing because the retailers must determine an item's taxable status based on when the consumer eats it. Then the retailer must decide if the item is a "snack." Snacks presumably purchased for immediate consumption, such as ready-to-eat popcorn, are taxed at 9 percent, while snacks presumably eaten at home, such as the large bag of popcorn, are taxed at 6 percent. Microwavable popcorn escapes taxation altogether.
 While snack taxes prove to be incomprehensible, they also fail to meet the four requirements for a fair tax set forth by the Foundation for State Legislatures, according to McCarthy. The foundation requires a tax to treat individuals equitably; facilitate taxpayer compliance; promote equitable, efficient, and effective administration; and be accountable to the taxpayers. "Snack taxes fail to meet each of these requirements," said McCarthy.
 SFA is an international trade association of approximately 900 company members that represent snack manufacturers and suppliers to the snack industry. Snacks produced by SFA member companies include potato chips, tortilla chips, corn chips, pretzels, popcorn, extruded snacks, snack nuts, dried meat snacks, pork rinds, multigrain snacks, bite-size crackers, cracker sandwiches, filled products, party mix, trail mix, bagel chips, fruit snacks, dips, and dip mixes.
 -0- 7/15/93
 /CONTACT: Jim McCarthy, vice president for government relations, Snack Food Association, 703-836-4500/


CO: Snack Food Association ST: Virginia IN: REA SU: LEG

IH-DC -- DC012 -- 1849 07/15/93 10:22 EDT
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Publication:PR Newswire
Date:Jul 15, 1993
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