Is there a person in Baltimore who honestly believes that Pepsi is closing its manufacturing plant in Hampden because of the city's 2-cent tax on beverage containers? If so, they're clearly drinking something a lot stronger than Mountain Dew.
Pepsi's decision to halt production in Baltimore for good this week isn't welcome news. It means 77 people have lost their jobs — although several hundred other Pepsi employees will continue to sell and distribute soft drinks from that location.
It's also not exactly a surprise. Last year, company officials warned the city that their Baltimore operation was not as cost-efficient as production facilities elsewhere in the Mid-Atlantic. Pepsi wants to control costs, a perfectly understandable impulse in the current economy. Why the Baltimore plant lags behind its peers has never been revealed.
But to suggest that the container tax played much, if any, role in that decision doesn't pass the proverbial Pepsi challenge. This is a tax paid at the distribution level, so whether or not Pepsi products are manufactured in the city, the tax will still be applied. If Pepsi wanted to avoid the tax, it would have to stop selling its products in the city, not stop making them here.
It's time for a little reality check. The container tax was approved last year on a limited, three-year basis (and at half the level initially sought by Mayor Stephanie Rawlings-Blake) when the city was facing a $120 million budget shortfall. The tax was a relatively minor patch that will raise about $5 million annually, a pittance compared to the $70 million in cuts the City Council also approved.
One might have thought from the hue and cry it stirred from the beverage industry, including a nonstop radio ad blitz, that the city was banning soft drinks altogether (as helpful as that move might be to the health of children in the midst of an obesity epidemic) instead of merely temporarily levying a tax on soft drinks sold in containers smaller than 2 liters.
The alternative offered by some on the council would have imposed an energy tax on all manufacturing, a genuinely bad idea that really would have driven jobs out of the city. Or perhaps the city might have raised the property tax rate, which might be even worse.
Then and now, the hardball tactics used against the container tax — including questionable claims that retailers would lay off employees by the hundreds — hasn't served the beverage industry well. The protests have only cost them credibility, particularly with the general public. The industry is clearly more concerned about other jurisdictions following suit than it is about a 2-cent tax in Baltimore.
If city officials want to look for ways to improve the business climate, better to consult executives at SavWatt USA, the Baltimore-based LED commercial lighting manufacturer that recently announced expansion plans that could result in the creation of several hundred new jobs over the next two years. Manufacturing may be facing tough times, but it's not dead yet.
Pepsi has made mistakes before. (Anybody remember Crystal Pepsi?) But the company ought to own up to the truth. A 2-cent container tax doesn't affect manufacturing costs one iota. And to the extent this or any tax allows the city to pay for police, fire, schools and other basic services, it means preserving a decent standard of living for city residents, including those employed by Pepsi.