Washington lawmakers look to tax SPAM for budget fix

Posted by: IceMyst

Washington lawmakers look to tax SPAM for budget fix - 04/01/05 03:13 AM

OLYMPIA, Wash. - Meet the secret ingredient in the state budget: Spam.

Along with tax increases on cigarettes and hard liquor, the recently released Senate budget proposal would slap a higher tax on canned meat.

Spam, vienna sausages, potted ham, chili con carne - no tinned meat would be spared the higher tax rate.

The business and occupation tax is paid by the producer, not the consumer, although taxes do have a way of trickling down the food chain.

"That's ridiculous," scoffed Richard Wilson of Olympia, who was drinking whiskey and smoking, though not eating tinned meat, at a bar called King Solomon's Reef on Tuesday afternoon.

"They're actually raising taxes on poor people who can't really afford it," Wilson said. "You know they don't have much money if they're eating chili out of a can."

Even some who believe lawmakers should raise taxes to pay for human services felt a twinge of sorrow.

"I'm torn between my love for vienna sausages and my love for state services," confessed Olympia lobbyist Lauren Moughon, who called the canned meat product a "guilty, guilty pleasure."

Producers and fans of meat in a can caught a break earlier this year when the state Supreme Court ruled in favor of the Tacoma-based makers of Nalley's chili con carne, and said nonperishable meat products should be taxed at the same, lower rate as perishable meat products.

Of course, the definition of "perishable" may be a matter of taste, Justice Susan Owens noted in her opinion: "Once canned, the chili has an indefinite shelf life in terms of remaining fit for human consumption, although it is likely to acquire an unsavory taste after four to six years."

Nevertheless, Nalley and other manufacturers that turn perishable meat into nonperishable meat products should be taxed at 0.138 percent, the court ruled, not 0.484 percent.

The Legislature will probably act this year to make canned meat producers pay the higher rate - a change that's worth $11 million a year to the state budget.

With a budget shortfall of $1.6 billion for the upcoming two-year budget cycle, legislators say they'll take money where they can get it - including a tin of meat.

The budget proposals from Senate Democrats and Gov. Christine Gregoire both include higher cigarette taxes, and Senate Democrats also want to impose a higher liquor tax.

Some drinkers, smokers and canned-meat-eaters say they're willing to pay a little extra if their money goes to a good cause such as education or health care.

"I smoke, and I don't have a problem with it. It's more incentive to quit. Hard liquor? I have no problem with that," said Michelle Mykol of Olympia. "The meat thing is just random, but it's all optional stuff I guess."

Others made plans to hit the grocery store.

"Guess I better stock up on jalepeno chili," said Debbie Culwell, a state employee on her lunch break.

Bills before the Legislature would apply the higher tax rate to nonperishable meat products but would exempt non-canned smoked or cured meat, jerky and meat byproducts such as tallow.

However, officials at the Seattle-based Oberto Sausage Co. have raised fears that their sausage and jerky could be the next tax target.

Officials at Oberto and Bird's Eye Foods, the parent company of Nalley, did not respond to interview requests on Tuesday.

The canned meat tax will affect about 3,500 companies, both in and out of Washington state, according to the Department of Revenue.

Conservatives have assailed the governor's and Senate Democrats' budget proposals, saying the reliance on "sin taxes" makes them unsustainable plans.

"If lawmakers choose to rely on such narrow-based taxes to support the general fund, they will face a continuation of the recent pattern of shortfalls, program cuts and budget legerdemain," said Kriss Sjoblom, vice president for research at the Washington Research Council.

But taxes that affect a narrow group of consumers are popular with state lawmakers across the country, said Bert Waisanen, fiscal analyst at the National Conference of State Legislators.

"It kind of depends on what your definition of sin is," he said.

Tobacco taxes are by far the most commonly used tool, he said, followed by alcohol taxes. He wasn't aware of any meat taxes pending in other states.

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