Glendening repeats attack on snack tax

April 13, 1995|By Sherrie Ruhl | Sherrie Ruhl,Sun Staff Writer

Gov. Parris N. Glendening promised yesterday to work harder next year to get the General Assembly to repeal the state's snack tax after a barrage of criticism by politicians, trade associations and companies blaming him for its defeat.

Failure to repeal the snack tax cost Harford County about 650 potential jobs at Frito-Lay Co.'s Aberdeen plant. The company, angry about the tax, said it would expand plants elsewhere.

The governor said he planned to ask legislative leaders to meet in a few weeks. "I think we can get a consensus and make a commitment to Frito-Lay. I feel fairly confident this will happen," he said.

He added: "We have a second shot at those Frito-Lay jobs. They will keep expanding. This is just a temporary setback."

But it wasn't clear whether that would persuade Frito-Lay to hold off expanding outside Maryland. The company wouldn't say what it would do if Maryland repealed the tax next year. "We have seen no indication that the snack tax will be repealed next year," said Robbi Dietrich, director of Frito-Lay's consumer and government affairs. "This year we had assurances from the very top, from the governor, that the snack tax would be repealed and that didn't happen."

Paul Gilbert, director of Harford's economic development department, worries that next year may be too late. "I've always been a firm advocate of striking while the iron is hot and it's cooling rapidly."

Mr. Glendening had insisted in his campaign speeches and in his State of the State speech that eliminating the snack tax was a major priority. "Part of the uproar we see now is because eliminating the tax was of tremendous symbolic importance to the business community; it's not just about reducing the cost of pretzels," he said.

"It's a tax that very few other states have and it makes us look less competitive," he said. "I believe we are and have been a pro-business state, but we have developed excess regulation and taxation and that has given us an anti-business image. We have to deal with that." Only Maryland, Maine and Washington impose a snack tax on salty foods. The tax was enacted in Maryland in 1993 when the state was desperate for revenues.

Mr. Glendening said he continued to push for the repeal of the snack tax up until the very end of the General Assembly, which adjourned Monday.

Frito-Lay officials were aware of the situation. "I did call twice last Friday and on Monday and talked to the president of Frito-Lay. He was quite unhappy," the governor said.

Frito-Lay's very public decision to take its new jobs to another state was "unfortunate," the governor said.

"I'm not being critical of them but I think Frito-Lay played into the hands of its critics who accused the company of being heavy-handed," he said. "Some politicians called that corporate blackmailing."

Some state politicians, including Sen. Barbara A. Hoffman, who heads the powerful Senate Budget and Taxation Committee, had complained that Frito-Lay used strong-arm tactics by threatening to pull jobs if the snack tax was not repealed.

Ms. Dietrich, of Frito-Lay, denied the charges. So did George Manis, Frito-Lay's chief lobbyist.

"To label Frito as a bandit or as heavy-handed is not fair. There was no arm-twisting and we were certainly not heavy-handed," Mr. Manis said.

Allen M. Barrett Jr., vice president of corporate communications for McCormick & Co. Inc. of Hunt Valley, said "Frito-Lay is a very important customer of McCormick, and at its request we went to Annapolis . . . to express our support for repeal of the tax. Our message is that it's not good business policy to arbitrarily decide some foods should be taxed and others not," said

Frito-Lay has also maintained the snack tax is a capricious one, which singles out some salty foods -- taco chips, for example -- but not others such as crackers. The two snacks have the same ingredients.

Others expressed frustration that the snack tax, which contributes up to $15 million in annual revenues to the state, was not repealed.

"This was a piece of legislation which would have really helped economic development and for more than one company than Frito-Lay," said Gene L. Burner, executive vice president of the Maryland Chamber of Commerce.

"We not only lost 650 potential jobs; we lost all the new jobs that would have sprung up to support them," said Mr. Burner. There are about 1,600 members of the state's chamber of commerce.

Mr. Burner said that for every $1 invested in one job, the state gets back $5.74 in economic value.

Robert O. C. Worcester, president of Maryland Business for Responsive Government, was livid that the tax was not repealed.

"The governor stands up at the start of the General Assembly and says making Maryland a pro-business state, that that's Numero Uno and that repealing the snack tax is very important. With that kind of talk it should have been a done deal, but no, the governor fell down on the job."

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