Water Bottler Companies Win the Tax Issue

Tax on Extraction


  The following article by John Kennedy appeared in “News Service of Florida” on Oct.  5, 2009.



THE CAPITAL, TALLAHASSEE, Oct. 5, 2009…..A year after Gov. Charlie Crist sought to make Florida the nation’s only state hitting bottled water companies with a new tax for pulling water from state springs, the idea now looks like history.

Although dollars for local water projects have dried up in the recession-wracked state budget, Florida’s Department of Environmental Protection says it has no plans to reintroduce the so-called water severance tax, which drew fierce opposition from big water companies that profit from the 3.6 million gallons they draw each day.

“It just didn’t go anywhere last year,” said DEP spokesman Doug Tobin. “And at this point, I don’t see the issue materializing again.”

Senate analysts said Crist’s water severance tax would have taken in about $66 million, with the money used to finance local water projects that have since lost all state funding. Looking ahead, some lawmakers say they will instead again float the idea of imposing a 6-cents sales tax on every bottle of water consumed in Florida – an approach that could raise about $42 million.

But with an election year looming – and Crist, himself, a candidate for U.S. Senate – any tax measures appear a longshot at the Capitol.

“Anytime there’s a tax, there are going to be legislators who just don’t want anything to do with it,” said Sen. Evelyn Lynn, R-Ormond Beach, who along with Rep. Michelle Rehwinkle-Vasilinda, D-Tallahassee, unsuccessfully pushed the bottled water tax last year.

While Crist’s idea would have hit the industry hardest – the bottled water tax is felt more by consumers. Crist’s approach was estimated to be passed onto consumers at a rate of less than a penny-per-pint bottle; while the sales tax would prove a full 6-cents extra per bottle at the cash register.

Nestle Waters of North America, which bottled water drawn in Madison and Zephyrhills – in the home district of designated future House Speaker Will Weatherford, R-Wesley Chapel, supported the per-bottle tax but resisted the water severance proposal.

“We just didn’t feel the governor’s proposal was a fair one,” said Jim McClellan, who represents Nestle. “The bottled water industry was one of the smaller users of water but we were being asked to fund an entire infrastructure need in Florida.”

While 28 water companies, including such giants as Nestle, Coca-Cola and Pepsi Co., draw 3.6 million gallons of water daily – in exchange for paying a one-time, $150 permit – by comparison, the agriculture industry uses 2.8 billion gallons daily and power companies 558.1 million gallons.

Severance taxes are applied by many states to oil- and gas-exploration. And several states have imposed high fees on bottlers pulling water from lakes, streams, springs and public aquifers. But Crist’s water severance tax was unique.

But with the idea now off the table, lawmakers say they will look to more conventional means to replenish county and city water projects – which used to receive $100 million annually from state real estate taxes.

Once Florida’s housing industry crashed, documentary stamp taxes started dwindling to where last year, no money was steered from the state to local governments for water projects such as desalination plants and other measures aimed at boosting supply and keepint it clean.

“We’ve got to help these governments out somehow,” Lynn said. “It all gets passed onto the consumer one way or another.”

Independent and Indispensable


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