Snackers forced to swallow a 5 percent tax on refreshments

May 31, 1992|By Marina Sarris | Marina Sarris,Annapolis Bureau

ANNAPOLIS -- The gang's coming over to watch the O's game this week and you need the standard fare: cheese puffs, chips, beer nuts and pork rinds.

But if you wait till tomorrow to hit the grocery store, bring along some extra change -- for the Tax Man.

Beginning June 1, Maryland will charge a 5 percent sales tax on snacks and prepared foods bought in grocery stores -- longtime bastions of tax-free food shopping. The new tax applies to a variety of items from soup (hot from the salad bar) to nuts (in the junk food aisle).

You can't avoid taxes by picking up heavier fare from the deli counter, instead. The tax also will apply to certain carryout items there, such as hot fried chicken and sandwiches, as well as to salad, soup and dessert from the salad bar.

You won't even be safe in the frozen food aisle, where ice cream, frozen yogurt and other desserts will be taxed for the first time -- but only if you buy less than a pint.

Excuse me, you ask. Is there any rationale to this tax?

Yes, according to the owner of your favorite sub shop or greasy spoon. The state already requires him to charge sales tax when you buy a bag of chips, a sandwich and an ice cream bar, or when you pick up an order of fried chicken and salad to go.

To be fair, restaurants have argued, Maryland should tax those same foods when they're sold in a supermarket or convenience store.

Strapped for cash to balance the state's $12 billion budget, the General Assembly in April did just that. It took aim at junk food and carryout junkies, along with consumers of a variety of other goods and services. The snack tax will transfer $10 million from consumers' pockets to the general treasury in fiscal year 1993, which begins July 1. The tax on carryout food from grocery stores will bring in $12.6 million.

Some consumers say the new tax law makes no sense.

Just ask Upper Marlboro resident Anissa Spriggs, who was shopping with her 3-year-old son at Giant Food's Festival-at-Riva store in Annapolis last week.

"Why single out these things?" she asked, referring to the soon-to-be-taxed Fritos corn chips in her cart. "Instead of buying the chips, you'll say I'll buy cookies instead." Cookies aren't taxed.

"I think the new taxes are ridiculous," said shopper Diane Middaugh of Severna Park as she surveyed the deli counter.

"I don't think people should be taxed on foods. I think Governor Schaefer could cut some of the fat out of his budget instead."

At the nearby salad bar, however, fourth-grade teacher Marsha McNamara said she wished the sales tax was higher.

As she piled lettuce and cucumbers into a plastic bucket, she explained that paying a few extra cents for a salad doesn't bother her as much as having to be furloughed for several days from her job in Anne Arundel County.

"I think everyone should have to contribute to taxes, and I'm a taxpayer, too," Ms. McNamara added.

Many of Maryland's new taxes went into effect May 1, including levies on gasoline, cigarettes, cellular phone service, wrestling broadcasts on subscription television, and calls to those pricey "900" Dial-A-Date numbers.

Tomorrow comes Phase Two -- the hit on snacks and carryout foods, along with security services.

Specifically, the snack tax affects cheese puffs and curls, corn chips, popped popcorn, pork rinds, potato chips and sticks, nuts, edible seeds, pretzels and "extruded pretzels."

The state comptroller's office was hard put to define an extruded pretzel, which apparently is made using a different process than regular, bread-like pretzels. But it's safe to say that if it looks like a pretzel, smells like a pretzel and tastes like a pretzel, it will be taxed like a pretzel.

Businesses and individuals who hire private eyes, armored cars, guard dogs, bodyguards, security guards and the like will also have to pay a 5 percent sales tax on the service beginning tomorrow.

That's bad news to George Phelps, owner of Phelps Protection Systems Inc., which has offices in Annapolis, Baltimore and St. Mary's County. "This is just another nightmare for me," said Mr. Phelps.

Other taxes, many of interest to businesses and wealthy people, will take effect with Phase Three July 1.

Office managers will start paying sales tax on commercial and industrial cleaning services. Individuals who make more than $100,000 and couples who earn more than $150,000 will see more money withheld from their paychecks because of the higher state income tax on their 1992 earnings.

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