Deposits & Taxes

The Beverage Industry & Beverage Container Deposits

The beverage industry believes comprehensive recycling is one of the best mechanism for minimizing the environmental impact of our industry’s bottles and cans. However, some opponents instead support forced deposit programs or “bottle bills.” When it comes to bottle bills, however, three decades of data and practical experience have undeniably demonstrated that imposing mandatory deposits on beverage containers is a poor way to address solid waste issues.

Forced deposit programs, more commonly known as “bottle bills,” share several common elements:

Impose a mandatory, pre-paid fee on certain beverage containers
Force consumers to return containers to designated locations to reclaim their fee
Require retailers or redemption centers to take back returned containers
Require significant new infrastructure (equipment, staff and facilities) to manage beverage containers separately from other products and packaging

Eleven states have enacted forced deposit programs – all but one of which was implemented prior to 1987. In fact, in 2002, the only municipal deposit ordinance was repealed in Columbia, Missouri. These deposit programs were all established to help reduce beverage container litter. In recent years, however, deposits also have been advertised as a way to increase beverage container recycling.

Forced Deposit Drawbacks

Forced deposits simply don’t work. They are a misguided policy choice because they:

Do little to help the environment as they target such a small part of the waste stream
Impose a hidden, regressive tax on consumers in the form of higher prices
Cost much more than comprehensive recycling or litter control programs, which accomplish the same goals
Penalize and hinder more efficient recycling programs
Are inconvenient

Deposits and Recycling

Beverage bottles and cans have always been a valuable and significant component of recycling programs. The earliest recycling of metals and glass grew out of market-based scrap companies that purchased materials from businesses and consumers. With markets for materials and voluntary participation, recycling programs were economically viable and sustainable.

These principles hold true today, but the economic incentive to recycle has increased as many communities and businesses face much higher waste disposal costs than ever before. The interest in capturing the value of the commodities and diverting waste from disposal led to the establishment of curbside recycling programs in the 1980s, providing collection of recyclables in the same way trash was collected.

Comprehensive recycling programs, like curbside collection, provide an easy and effective way for consumers to recycle their household waste, including beverage bottles and cans.

Yet, some argue that voluntary programs don’t go far enough. They advocate the use of mandatory deposits on beverage containers to coerce consumers into recycling. Data shows these mandated or forced deposit programs are costly, inconvenient and compete with successful voluntary recycling efforts.

Comprehensive Recycling Works

On the other hand, comprehensive recycling programs provide systems through which households can recycle a wide range of materials. Households recycle through curbside pickup or, in smaller communities, drop-off programs. These programs often include an educational component to encourage and build participation.

We know that comprehensive recycling is the best way we have to capture waste conveniently, efficiently and equitably. These programs have expanded rapidly and are extremely popular with citizens and businesses alike for one good reason—they work.

Taxing Beverages

Some states and communities have implemented taxes on nonalcoholic beverages as a way to raise money for various programs. Taxing beverages, or any food item, is widely unpopular and has adverse socio-economic effects, because the taxes fall most heavily on low-income people. The key arguments against beverages taxes are that they are:

Unpopular - The public views beverage taxes as a tax on food. Surveys show that 95 percent of consumers believe they will ultimately bear the burden of beverage taxes, passed on to them by producers and retailers.
Regressive – Beverage taxes hurt low-income consumers significantly more than others because the taxes consume a larger portion of their income. As a result, those least able to pay bear the greatest burden.
Discriminatory – Beverage manufacturers and bottlers already pay their fair share of business and other taxes, generating more than $30 billion in revenue annually for federal, state and local governments.
Anti-business – Beverage taxes raise the cost of doing business, not just for beverage companies, but for their suppliers and retail customers as well. Higher costs reduce reinvestment and job growth – a critical consideration given that the beverage industry directly or indirectly supports over 3 million US jobs.

Today only Arkansas, Washington, and West Virginia retain discriminatory taxes against beverages. In recent years, the trend has been to repeal or reduce these taxes. In fact, since 1990, 10 states and communities have repealed discriminatory taxes on soft drinks. And, since 1992, no state or municipality has enacted a new beverage excise tax.