Mayor Gonzales misled public on his plan to impose new tax, Rio Grande Foundation analysis finds

In one of his first official acts since ringing in the New Year on the Plaza, Santa Fe Mayor Javier Gonzales revealed his New Year’s resolution: to impose a new tax on Santa Fe residents (the bill is expected to be introduced at tonight’s Council meeting). Despite recently praising himself in interviews for not raising taxes, Mayor Gonzales is expected to call a special election for a one cent per ounce tax on a wide range of beverages such as soda, energy drinks, lemonade, iced tea and even almond milk.

A Rio Grande Foundation analysis of records and communications released under the Inspection of Public Information Act, along with media reports and other publicly available documents concluded that the mayor has been less than forthcoming about his desire to impose new taxes on Santa Feans.

“From the outset, Mayor Gonzales has desired more taxes to fuel more government spending,” Paul Gessing, president of the Rio Grande Foundation, said. “Our analysis exposes the absurdity of him using tax hikes to masquerade as a public health crusader instead of a typical tax-and-spend politician.”

The analysis can be found on the following pages. Among the key findings:

  • Mayor Gonzales misled the public about his intention to impose a beverage tax from the start.
  • Mayor Gonzales’ community experts rejected his tax, calling it “the worst thing we could do.”
  • Mayor Gonzales’ assertion that his soda tax will bring in $10 million annually is a fantasy.

Additionally, this beverage tax will significantly increase the cost of doing business for retailers, and almost all consumers will see higher grocery bills. Low income residents will bear the brunt of Mayor Gonzales’ regressive new tax.

“Just as his community experts did, Santa Fe city councilors should reject this proposal and say ‘No Taxation on Carbonation,’” Gessing said.

Examining records and communications released under the Inspection of Public Information Act (and currently available at Santa Fe City Hall), along with media reports and other public records, the Rio Grande Foundation arrived at the following conclusions regarding Santa Fe Mayor Javier Gonzales’ proposal to impose a one cent per ounce tax on sweetened beverages:

  • A beverage tax was the intended outcome of the mayor’s resolution to “explore active ways of reducing sugar intake” among Santa Fe residents
    • Before the resolution was made public, Santa Fe Legislative Liaison Jesse Guillén called a tax on sugary drinks “a good place to start.” The mayor seemingly agreed and replied with an article about taxing beverages.
    • Days later, model legislation of a beverage tax similar to the mayor’s proposal was circulated among the mayor and his top-level staff
  • Mayor Gonzales misled the public about his intention to impose a beverage tax from the start
    • In response to questions from the Albuquerque Journal spurred by the Rio Grande Foundation, the mayor directly denied his resolution lays the “groundwork” for a beverage tax, even though internal emails show plans for one were already in the works.
    • Afterward, the Rio Grande Foundation warned, “don’t buy the mayor’s claim that his resolution “‘doesn’t lay the groundwork for anything but a healthier community.’ Taxing soda has become an idée fixe for the left’s unsleeping army of lifestyle police.”
    • While the resolution was in the draft phase, Guillén suggested removing a reference to taxes because it would “fan conspiracy flames.” We now know Rio Grande Foundation wasn’t chasing a conspiracy after all.
  • After his masquerade was rejected, Mayor Gonzales did an about-face: From public health to revenue
    • Gonzales initially said, “This is a public health issue and all we’re doing with this resolution is asking our community experts, the Santa Fe Food Policy Council, to study the issue and come back to us with some options… Once they do that, we’ll take a look at what they recommend, have our discussion and then decide what we do or do not support.”
    • Gonzales’ community experts determined that “education is key” to reducing sugar intake and “imposing additional taxes [soda tax] would be the worst thing they can do.” (full minutes)
    • Gonzales ignored their advice and announced his tax scheme two weeks later.
    • In an apparently retreat from his concern about sugar consumption, he claimed to support the beverage tax “[a]fter determining that small increases in property or gross receipts taxes wouldn’t raise enough” revenue.
  • The mayor’s plan is built around a faulty economic premise
    • Mayor Gonzales said because his proposed tax is not a sales tax, prices for consumers won’t increase. The mayor doesn’t understand a basic economic principle: Businesses don’t pay taxes, people do.
    • In Philadelphia, where a similar tax took effect on January 1, “consumers appear to be bearing the full brunt” and some “are stupefied at the increased cost.”
  • Mayor Gonzales’ assertion that his soda tax will bring in $10 million annually is a fantasy
    • A $.02 per ounce soda tax hike in is projected to bring in only $3.8 million each year in Boulder, Colorado, even though it is twice the rate of the Santa Fe proposal and Boulder is a more populous city.
    • Soft drink consumption in the United States has been on the decline for years, making beverage taxes an “unreliable and unsustainable revenue source,” according to the American Beverage Association.
    • This means revenues will likely need to be shored up year after year with additional taxes, such as the property tax or Gross Receipts Tax increases the mayor also considered.