From the Detroit Free Press:
Lt. Governor John Cherry this afternoon proposed using Michigan’s water supply to fund its education system.[...]
By charging water bottlers 10 cents on each bottle of water they pull from Michigan waterways, the state could raise $118 million a year, Cherry said. That would cover the $100 million needed for the Promise Scholarship and leave another $18 million for wetlands protection, he said.
Unjustified. What logic is there to hitting bottled water with a special tax to fund education? It sounds like just a revenue grab with a random product being chosen to take the hit. The rhetoric about taxing companies shouldn’t divert people’s attention from the fact that consumers will be the ones paying this tax in the end.
Unwise. Michigan isn’t exactly swimming in tax-paying business activity nowadays, so the idea of taxing a product only if it is made in Michigan is short-sighted. Does Lt. Gov. Cherry not realize that by making Michigan products more expensive with a rather hefty tax, they’ll be pushed out of the market by non-Michigan products? Nestle Waters put out a press release noting that they employ a few hundred people at its water bottling plant in Michigan, with a $2 million tax bill.
Unconstitutional. Article IX of the Michigan Constitution prohibits imposing sales taxes on food products. Perhaps there is an argument about whether bottled water is a food product (the FDA says it is) and whether a tax on someone who makes food is a tax on food, but Michigan could expect extended litigation on this.
Read the original post from the Tax Foundation…