PROVIDENCE — Could a small hike in the price of sugary beverages spell a huge amount of trouble for Rhode Island’s local businesses? “Stop the RI Beverage Tax,” a coalition of more than 500 local restaurants, bars, grocery and convenience stores just beginning to recover from the COVID-19 pandemic, certainly thinks so.
The coalition was formed in January, when Sen. Valarie Lawson and Rep. Jean Philippe Barros, both Democrats, introduced a bill that would impose a tax on everyday beverages such as sodas, sports drinks, sweetened teas and coffees 1.5 cents per ounce. Citing the prevalence of diabetes and obesity in Rhode Island, the bill suggests that a portion of the proposed tax’s revenue is reinvested in low-income communities to increase access to healthy foods.
Rhode Island “surprisingly” has one of the highest rates of pediatric obesity in the country, said Dr. Amy Nunn, the Executive Director of the Rhode Island Public Health Institute. Nunn, who also runs RIPHI’s ‘Nourish RI’ initiative — the driving advocacy group behind the tax — points to the “unnecessary consumption of sugar” as being one major contributor to obesity, diabetes, and other related chronic diseases.
Proponents of the bill want it brought to the General Assembly for consideration in its next legislative session in January. They would not be the first to bring legislation like this to the floor. Dr. Nunn points out that “42 countries” have already adopted similar taxes, and seen great success.
“People switch to water,” Nunn said, of how businesses can expect to make up lost revenue from sugary drinks. “Most of the research shows this is actually not bad for small businesses,” Nunn said, citing studies from cities with similar taxes such as Seattle, Philadelphia, and Berkeley. “They don’t end up losing revenue. People just buy other things.”
Nourish RI, a statewide coalition tackling hunger alleviation initiatives, would incentivize “healthy eating behaviors” through the sugary drink tax, using the revenue raised to fund “impactful” SNAP incentives. SNAP incentives, which would be funded in part by the tax, double the value of the dollar when buying fresh produce.
But not all are convinced a tax on sugary drinks is the way to tackle food insecurity and health concerns in Rhode Island.
Eric Handwerger, owner of the Ocean State Sandwich Company, said signing onto the ‘Stop the RI Beverage Tax’ coalition was a no-brainer. Much of his sales come from workers in Providence’s financial district tacking on a beverage to their lunch order, Handwerger said.
His restaurant is only now recovering from the devastation brought on by the COVID-19 pandemic, which saw his sales sharply decline since March 2020. The prospect of increasing the price of almost all his beverages by 1.5 cents an ounce rubs salt in an already open wound.
Daouda Ndlaye, the owner of Li’l General in Lincoln, said the tax could drive customers away from his store, and from the state itself. The Li’l General Ndlaye operates, one of a staple convenience store chain in Rhode Island, is right on the border shared with Massachusetts. Ndlaye fears the increased cost of sugary drinks will mean customers “skip the little guy” and take their business out of state. The coalition agrees with Ndlaye, and said the beverage tax would lead to a loss of at least $100 million in retail and restaurant sales annually, compounded by the potential loss of millions more in sales tax revenue.
Even when customers aren’t driven out of the state, businesses could still lose out, said Christopher Hunter, a spokesperson for the coalition.
“A beverage tax will dramatically raise prices on everyday beverages, which will risk jobs and make it harder for businesses to survive,” said Hunter, managing director of Advocacy Solutions LLC, a strategic consultation firm. “This tax is a bad idea for Rhode Island’s working families, small business owners and employees — especially at a time where the cost of groceries continues to rise”.
Small business owner Alejandra Ruelus, who owns and operates Providence’s Casa Azul Taqueria with her husband, sees this tax as a risk to her job. Ruelus said she and her staff may need to work 70-80 hour weeks to make up for lost revenue if fewer patrons can afford everyday beverages. Understaffed and overworked, but wanting to “be there” for her business, Ruelus is finding it tough to be optimistic about the restaurant’s future if the tax is approved.
“I can’t sleep at night for many reasons,” Ruelus said, “But this is one of the things I’m very nervous about. If they pass this, it’s going to make it very hard.”
Ndlaye and Handwerger share her concerns, and emphasized the impact those increased hours could have on family time, and strain their ability to have a life outside of keeping their businesses afloat, especially as they are already dealing with staffing and supply chain crises.
However, proponents of the tax don’t see protecting small businesses and alleviating hunger as being at odds. Dr. Nunn points out that during the pandemic, while people certainly struggled to keep businesses afloat, “one of the things they often have to sacrifice is healthy food.” The timing of the legislation, said Nunn, is not inappropriate. Rather, passing it is “more important now than ever.”
Coalition members have a problem with the bill itself, too. It is unclear to many of the businesses affected what constitutes a ‘sugary’ or ‘unhealthy’ beverage — and whether the government would make any distinction between beverages sourced from local companies, and big-name corporate brands such as Coca-Cola.