Guam business leaders come out against sugary drink tax
Joe Taitano II | Guam Daily Post | Sep 22, 2023
Businesspeople involved in the wholesale and manufacturing of sodas and other sweet beverages who testified during a hearing Thursday at the Guam Congress Building in Hagåtña all spoke against a proposed tax on sugary drinks.
Sen. Roy Quinata said he proposed his Sugar Sweetened Beverage Tax with the health and wellness of the community in mind. The measure would throw a tax of 2 cents per ounce on drinks with added sugar, or about 24 cents added to a 12-ounce can of soda. Sugary syrups and beverage mixes would be similarly taxed, based on the amount of drink they yield when stirred up.
Proceeds from the tax would go toward maintaining village and school sports facilities. Its unclear just how much the tax would bring in annually, according to a fiscal note for the measure, as the Department of Revenue and Taxation does not track data on drink sales.
$10 more a case
Tom Shimizu, general manager of distributor Ambros Inc., said he doubted the money would go toward its intended purpose, given GovGuam’s history with spending tax dollars. What was guaranteed, Shimizu said, was the tax raising the costs for consumers, potentially by as much as $10 for a 24-pack case of 12-ounce drinks.
The cost to me for … case(s) of sugar drinks will go up by $5.76. For my products, there's a guarantee that the price that I sell right now will move up not by $5.76, it will move up by about $7.48 a case, and that's what I sell to the retailer. Now, it's not 100% guaranteed, the number, but it's going to be close (to) the result. When the retailer sells it to the consumers, it's probably going to go up north of $10 a case,” Shimizu said, after business privilege taxes are factored in.
Business also would be driven behind the fence of local military bases, with customers opting to get their sodas from commissary stores that already are cheaper due to the lack of freight that’s paid, he said.
Not the solution
Micronesian Brokers Inc. General Manager Hermie Queja told lawmakers he didn’t object to the idea of combating diabetes and obesity on Guam.
“I'm not questioning those, what I'm questioning is the solution and the policy that's been proposed,” Queja said.
Trying to discourage the consumption of sugar through the tax didn’t move closer to solving the problem of obesity and was “simplistic,” said Queja. The government would be better served by putting forth educational programs for healthy living, he said, and making consumers informed. Implementing better physical education programs at local schools and providing workable water fountains for kids also would be better solutions, Queja said.
“Our government should be ... encouraging people to eat a healthy diet and lead balanced lifestyles, not taxing them. Our government should be looking at creating policies to encourage people to get out of their chairs, get moving,” he said.
Jon Denight, general manager of Pepsi Guam Bottling likewise agreed that the measure would only hurt the pockets of both customers and local businesses. Like Shimizu, Denight said he believed the tax would encourage people to shop on base instead of at locally run businesses. While shopping on base to avoid extra taxes, customers would just buy the rest of the groceries they needed, he said.
In other places where taxes were implemented, “some grocers in the tax zone saw 30% decrease in their sales," Denight said, adding, "30%, you know, that's going to kill you."
"Can we all just agree that the people of Guam have a right to decide what groceries they want to buy? And that the government has no right to get involved in that personal choice. It's your shopping cart. It's your shopping choice,” he said.
Both Sens. Telo Taitague and Jesse Lujan commented that they were opposed to the tax, with Lujan saying, “we cannot tax our way to good health.”
Sen. Quinata said he understood the proposed tax was not perfect, but said it was based on studies done by University of Guam students on the impact of sugary drinks on medical conditions such as obesity and diabetes.
“If we can better ... serve our community by having better facilities through this funding source, I think it's a win-win,” Quinata said.