A number of tax hikes could be in store for D.C. residents, as the D.C. Council prepares to vote on measures that would increase taxes on soda, liquor, health club memberships, parking and admission to museums and cultural events, as well as a higher income tax for wealthy residents.
The D.C. Council has come up with the increases, to be voted on later this month, to raise $550 million in revenue for the city budget.
While it is unclear whether any new taxes will be passed, the most controversy has arisen recently over the proposed soda tax. In an effort to raise funds for the Healthy Schools Act of 2010, D.C. Councilmember Mary Cheh (D-Ward 3) has proposed a one-cent tax per ounce of soda and other sugary beverages sold in the District, according to the blog, DCist. Cheh hopes that this new tax will help reduce the extent of the obesity epidemic in the District. According to the D.C. Department of Health’s Obesity Report and Action Plan, over 20 percent of adults 18 years and older living in the District are obese. Additionally, over 17 percent of high school-aged people are obese.
While Councilmember Jack Evans (D-Ward 2), the chair of the council’s finance committee, believes in supporting the Healthy Schools Act of 2010, he said he did not feel the soda tax was the best solution for generating income or reducing obesity rates. Andrew Huff, Evans’ director of communications, said the act could be funded fully without any tax increases as long as the city government exercises fiscal restraint. Huff said that the soda tax, if approved, would likely make little difference in the obesity epidemic. It may even decrease revenue.
“It will have an impact on small and large businesses, [but individuals] will go to Virginia and Maryland to buy their soda,” said Huff. “There’s no proof that taxing soda will cause people to buy it less.”
Brad Glasser (COL ’11), chief executive officer of The Corp, said that the Corp disapproved of the proposed tax and expressed his concern for customer satisfaction.
“It’s certainly nothing we’re looking forward to, [and] we’ve made that opinion known by way of letter to [Councilmember] Cheh,” said Glasser.
“While I’m confident it wouldn’t be a make or break situation for the Corp, it certainly would be unfortunate to have to raise prices. As always, whether its coming internally or being imposed on a governmental level, we really do like to keep prices as low as possible for our customers, and when that ability is taken out of our hands, it really is frustrating.”
Despite The Corp’s frustration, Glasser stated that ultimately, they would respect and comply with whatever decision the D.C. Council makes because of the laudable objectives of the imposed tax.
“We will be forced to comply with whatever the council decides, and hopefully we’d see at the very least some positive impact come out of the funds raises through this [effort] just as we did . from the frustrating bag tax that is going to clean up the Anacostia River, which is a pretty worthy cause at the end of the day,” Glasser said.
Another proposal made by D.C. Councilmember Michael Brown (I-At-Large) includes a new tax plan that would create new income tax brackets. The new plan would impose an income tax rate of 8.9 percent for residents with an annual salary of $250,000 or more and a rate of 9.4 percent for residents with an annual salary of $1 million or more, according to The Washington Post. The income tax rate for residents earning $40,000 or more is currently 8.5 percent. The revenue generated from these new taxes would also benefit the fiscal 2011 budget.
Brown had been worried that the new taxes would drive wealthy residents out of the city into the surrounding suburbs, so he set up a meeting with some of those who would be subject to the new taxes in order to clarify what this new plan would actually mean to them.
Judith Sandalow, executive director of the Children’s Law Center, told The Washington Post that this meeting was a helpful exercise in explaining the new tax plan.
“There were a lot of myths debunked,” Sandalow said.
Councilmember Evans, however, said he felt this tax increase is also unnecessary.
“Councilmember Evans is against all new taxes. . We can’t keep going back to people who pay the highest taxes in the region already,” Huff said.
“The [city] government hasn’t done anything particularly irresponsible, but [it] has to do its part . [they] can’t keep going to residents asking for more money.”
– Hoya Staff Writer Laura Engshuber contributed to this report.