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Tall Order Tax, Steaming Debate

Aired September 03, 2003 - 03:11   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


DARYN KAGAN, CNN ANCHOR: Coffee lovers in Seattle are getting a jolt, but not from the caffeine in their drinks. Latte drinkers are stirring up a lot of debate because of a mucho grande proposal that might hike the cost of a mocha grande.
CNN's Anderson Cooper brings us a story about a tall order tax that has a lot of people steaming.

(BEGIN VIDEOTAPE)

ANDERSON COOPER, CNN ANCHOR (voice-over): If you don't mind paying 2.50 for a latte, would you mind shelling out an extra dime every time? That's the question Seattle residents now face.

Some critics of the proposed tax wonder whether it's a sin tax or a luxury tax. And if it's sin, why not focus on alcohol? If it's luxury, why not focus on real luxuries?

With a tax on Crissal (ph), for instance, you might think a single P. Diddy soiree could take a classroom of kids from pre-K through pre-med.

It turns out Seattle doesn't drink enough alcohol to make a tax viable. But coffee, it's the Mecca of moccachino. Residents sip some 200,000 espressos a day.

Still, taxing espresso, isn't that like taxing cheese steaks in Philly or promises in Washington?

Seattle's chamber of commerce says education should be funded through the regular education budget, the same budget the chamber lobbied to cut last month.

Starbucks is also part of the grande mocha lobbying effort against the tax, but defeating it may be a tall order. Polls show fans of the tax are in a clear majority, while for those who oppose it, the future looks black. No sugar.

Anderson Cooper, CNN, New York.

(END VIDEOTAPE)

KAGAN: All right, let's stir this one up and hear from both sides.

Don Burbank is executive director of the Economic Opportunity Institute and a syndicated columnist for "The Daily News Tribune" in Tacoma, Washington. Tom Buckley represents the group that calls itself Joined to Oppose the Latte Tax, (UNINTELLIGIBLE) there, J.O.L.T. He's vice president of a coffee roasting company in Seattle.

Gentlemen, let's talk about the tax. And, John, we're going to go ahead and start with you. Just to be clear, we're talking about espresso drinks, not just your regular brewed coffee. Why tack on the 10 cents for the foo-foo expensive drinks? Aren't they just outrageously expensive enough as it is?

JOHN BURBANK, ECONOMIC OPPORTUNITY INSTITUTE: Well, let's talk about, first of all, about the need. You know, today is the first day of school for the kids in Seattle public schools. And so, you have a lot of kids really excited about kindergarten, but their teachers are not going to be too happy, because probably about 50 percent of the kids won't be ready or eager to learn when they step into those doors.

And we have to do something about this. I mean, they're -- we just had test scores that were reported by our paper. It showed that in some schools, only 15 percent of the kids are meeting standards.

So, this is a really important need, and we need to find local funding for our local kids. And that's what this tax is all about.

KAGAN: All right, we're going to bring Tom in on that. Tom, it's hard to be against kids, and we're only talking 10 cents for a cup of coffee.

TOM BUCKLEY, J.O.L.T., JOINED TO OPPOSE THE LATTE TAX: I couldn't agree with you more over the issue. The issue is extremely important. That's why it should be funded by the average -- the typical revenue streams, not from the food -- a disposable food item, something that's food.

KAGAN: So, give us an idea. Like instead of coffee, like, what would be taxed?

BUCKLEY: Well, there's a levy coming up next year that it can be attached to that's related to education issues that's already there. It just needs to be funded heavier.

Focusing on coffee and saying it's going to -- the numbers that they're saying it's going to generate are not the actual numbers that they will. The numbers that are projected are way off. It's too hard to project $7 million that's going to come from espresso. It's not...

KAGAN: So, you're saying they're not going to get that much money?

BUCKLEY: No, because it's too hard to define what an espresso shot is. Their statistics -- their numbers came from the Specialty Coffee Association, which covers all coffee, which includes drip coffee.

KAGAN: OK. John, let's bring you back in here. Now we've come down to the point of what is espresso? BURBANK: Well, this is an interesting...

KAGAN: If it looks like a duck, quacks like a duck? I mean...

BURBANK: Yes, well, if it gives you a jolt like a duck it works. And, in fact, the initiative is quite specific about the determination of espresso. It's one-half ounce of pulled espresso.

But let's get back to this idea of taxes. You know, we do specialty taxes in our city all the time. We have a specialty tax for Safeco (ph) Field, Mariner Stadium. We have a specialty tax for Paul Allen Football Team.

BUCKLEY: The specialty tax typically has to do...

BURBANK: And so...

BUCKLEY: The specialty taxes typically have to do with the issue at hand. What does coffee and education have to do with each other?

BURBANK: Well, I'll tell you what it has to do with. The thing is that Seattle loves its coffee and we love our kids. And here's a way to do both. We can have our coffee, and we can feel good that when we get ourselves a latte with vanilla flavoring, which I discussed, we know that 10 cents is going to go early learning and care.

And it means that for every dollar invested in our kids, in a high-quality pre-kindergarten society, all of us -- businesses, citizens -- save about $7 in the future in terms of reduced crime, in terms of increased productivity of those kids when they grow up, and in terms of better achievement as students.

KAGAN: John, let's move on past the need for a moment here, because I think everyone's agreeing that -- everyone's kind of pro- kids. The debate is more where does the money come from?

I think one thing that's going to capture the imagination and the attention of a lot of people, because, of course, we're broadcasting to a wider audience than just Seattle here, is the idea of Seattle going off of something that is so identified with, and that is coffee.

BUCKLEY: Right. You know, what kind of message is that sending as far as, you know...

BURBANK: Well...

BUCKLEY: ... to be successful or trying to run a business just because we happen to be known for coffee. It's just like the example today. Should Philadelphia be charged for their cheese steaks for some issue that's, you know, not related to a sandwich?

BURBANK: Well, wouldn't it be great if Seattle was known for its coffee and for robust funding of high-quality pre-kindergarten? That's really what the issue is. KAGAN: Tom, let me put you on the spot here. We are basically talking about a luxury item. I know people who are waking up in Seattle, if they heard me say that their strong coffee is a luxury and not a necessity they might disagree with that.

BUCKLEY: Well...

KAGAN: But it is not a basic need of life. So why not tax them like this?

BUCKLEY: It's all the definition of what a luxury item is. For some people, a luxury item is a donut everyday. Just by putting the dollar amount, the difference between a drip coffee and an espresso and the price difference, and saying, well, that price difference is what makes it luxury.

Espresso is just a different form of drip coffee gone through a different machine. It's not a luxury for my 300 wholesale customers that are all basically mom and pop type businesses to be in business.

KAGAN: You think it's going to hurt your business.

BUCKLEY: Oh, it's going to...

KAGAN: You think it's going to hurt business.

BUCKLEY: What people don't realize is they think of Seattle as just being big coffee chains. Most of our customers, plus owners who have their own retail shops, this is going to be a very taxing, you know...

KAGAN: Literally.

BUCKLEY: ... mind the punishment -- to deal with.

There are a lot of people that are just getting by in our industry. Our industry is very competitive. There's a lot of -- you know, a lot of single mothers, a lot of small family-run companies that this is actually going to bother them.

KAGAN: Our time is short. The vote is September 16, coming up here in a couple weeks. Does it look like it's going to pass?

BURBANK: Absolutely, because I think Seattle likes -- want to have 10 cents for kids. And my friend over here, you know the -- his company has had sales increases from $2 million to $3.5 million projected this year.

So, this is something that we can afford to do. And especially when we have kids, 2,400 kids in our city are prevented from participating in Head Start because there's not the funding for them. And these are kids in need. We can't afford to leave them out anymore. That's what this tax is all about, and that's what this initiative is all about.

KAGAN: And with that, we will let you, gentlemen, settle this over a cup of coffee. Thank you.

BURBANK: Thank you.

BUCKLEY: Thank you.

KAGAN: Thank you for both sides of the debate. We appreciate it. And I like a tall cappuccino with a lot of sugar. Thank you so much.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.







Aired September 3, 2003 - 03:11   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
DARYN KAGAN, CNN ANCHOR: Coffee lovers in Seattle are getting a jolt, but not from the caffeine in their drinks. Latte drinkers are stirring up a lot of debate because of a mucho grande proposal that might hike the cost of a mocha grande.
CNN's Anderson Cooper brings us a story about a tall order tax that has a lot of people steaming.

(BEGIN VIDEOTAPE)

ANDERSON COOPER, CNN ANCHOR (voice-over): If you don't mind paying 2.50 for a latte, would you mind shelling out an extra dime every time? That's the question Seattle residents now face.

Some critics of the proposed tax wonder whether it's a sin tax or a luxury tax. And if it's sin, why not focus on alcohol? If it's luxury, why not focus on real luxuries?

With a tax on Crissal (ph), for instance, you might think a single P. Diddy soiree could take a classroom of kids from pre-K through pre-med.

It turns out Seattle doesn't drink enough alcohol to make a tax viable. But coffee, it's the Mecca of moccachino. Residents sip some 200,000 espressos a day.

Still, taxing espresso, isn't that like taxing cheese steaks in Philly or promises in Washington?

Seattle's chamber of commerce says education should be funded through the regular education budget, the same budget the chamber lobbied to cut last month.

Starbucks is also part of the grande mocha lobbying effort against the tax, but defeating it may be a tall order. Polls show fans of the tax are in a clear majority, while for those who oppose it, the future looks black. No sugar.

Anderson Cooper, CNN, New York.

(END VIDEOTAPE)

KAGAN: All right, let's stir this one up and hear from both sides.

Don Burbank is executive director of the Economic Opportunity Institute and a syndicated columnist for "The Daily News Tribune" in Tacoma, Washington. Tom Buckley represents the group that calls itself Joined to Oppose the Latte Tax, (UNINTELLIGIBLE) there, J.O.L.T. He's vice president of a coffee roasting company in Seattle.

Gentlemen, let's talk about the tax. And, John, we're going to go ahead and start with you. Just to be clear, we're talking about espresso drinks, not just your regular brewed coffee. Why tack on the 10 cents for the foo-foo expensive drinks? Aren't they just outrageously expensive enough as it is?

JOHN BURBANK, ECONOMIC OPPORTUNITY INSTITUTE: Well, let's talk about, first of all, about the need. You know, today is the first day of school for the kids in Seattle public schools. And so, you have a lot of kids really excited about kindergarten, but their teachers are not going to be too happy, because probably about 50 percent of the kids won't be ready or eager to learn when they step into those doors.

And we have to do something about this. I mean, they're -- we just had test scores that were reported by our paper. It showed that in some schools, only 15 percent of the kids are meeting standards.

So, this is a really important need, and we need to find local funding for our local kids. And that's what this tax is all about.

KAGAN: All right, we're going to bring Tom in on that. Tom, it's hard to be against kids, and we're only talking 10 cents for a cup of coffee.

TOM BUCKLEY, J.O.L.T., JOINED TO OPPOSE THE LATTE TAX: I couldn't agree with you more over the issue. The issue is extremely important. That's why it should be funded by the average -- the typical revenue streams, not from the food -- a disposable food item, something that's food.

KAGAN: So, give us an idea. Like instead of coffee, like, what would be taxed?

BUCKLEY: Well, there's a levy coming up next year that it can be attached to that's related to education issues that's already there. It just needs to be funded heavier.

Focusing on coffee and saying it's going to -- the numbers that they're saying it's going to generate are not the actual numbers that they will. The numbers that are projected are way off. It's too hard to project $7 million that's going to come from espresso. It's not...

KAGAN: So, you're saying they're not going to get that much money?

BUCKLEY: No, because it's too hard to define what an espresso shot is. Their statistics -- their numbers came from the Specialty Coffee Association, which covers all coffee, which includes drip coffee.

KAGAN: OK. John, let's bring you back in here. Now we've come down to the point of what is espresso? BURBANK: Well, this is an interesting...

KAGAN: If it looks like a duck, quacks like a duck? I mean...

BURBANK: Yes, well, if it gives you a jolt like a duck it works. And, in fact, the initiative is quite specific about the determination of espresso. It's one-half ounce of pulled espresso.

But let's get back to this idea of taxes. You know, we do specialty taxes in our city all the time. We have a specialty tax for Safeco (ph) Field, Mariner Stadium. We have a specialty tax for Paul Allen Football Team.

BUCKLEY: The specialty tax typically has to do...

BURBANK: And so...

BUCKLEY: The specialty taxes typically have to do with the issue at hand. What does coffee and education have to do with each other?

BURBANK: Well, I'll tell you what it has to do with. The thing is that Seattle loves its coffee and we love our kids. And here's a way to do both. We can have our coffee, and we can feel good that when we get ourselves a latte with vanilla flavoring, which I discussed, we know that 10 cents is going to go early learning and care.

And it means that for every dollar invested in our kids, in a high-quality pre-kindergarten society, all of us -- businesses, citizens -- save about $7 in the future in terms of reduced crime, in terms of increased productivity of those kids when they grow up, and in terms of better achievement as students.

KAGAN: John, let's move on past the need for a moment here, because I think everyone's agreeing that -- everyone's kind of pro- kids. The debate is more where does the money come from?

I think one thing that's going to capture the imagination and the attention of a lot of people, because, of course, we're broadcasting to a wider audience than just Seattle here, is the idea of Seattle going off of something that is so identified with, and that is coffee.

BUCKLEY: Right. You know, what kind of message is that sending as far as, you know...

BURBANK: Well...

BUCKLEY: ... to be successful or trying to run a business just because we happen to be known for coffee. It's just like the example today. Should Philadelphia be charged for their cheese steaks for some issue that's, you know, not related to a sandwich?

BURBANK: Well, wouldn't it be great if Seattle was known for its coffee and for robust funding of high-quality pre-kindergarten? That's really what the issue is. KAGAN: Tom, let me put you on the spot here. We are basically talking about a luxury item. I know people who are waking up in Seattle, if they heard me say that their strong coffee is a luxury and not a necessity they might disagree with that.

BUCKLEY: Well...

KAGAN: But it is not a basic need of life. So why not tax them like this?

BUCKLEY: It's all the definition of what a luxury item is. For some people, a luxury item is a donut everyday. Just by putting the dollar amount, the difference between a drip coffee and an espresso and the price difference, and saying, well, that price difference is what makes it luxury.

Espresso is just a different form of drip coffee gone through a different machine. It's not a luxury for my 300 wholesale customers that are all basically mom and pop type businesses to be in business.

KAGAN: You think it's going to hurt your business.

BUCKLEY: Oh, it's going to...

KAGAN: You think it's going to hurt business.

BUCKLEY: What people don't realize is they think of Seattle as just being big coffee chains. Most of our customers, plus owners who have their own retail shops, this is going to be a very taxing, you know...

KAGAN: Literally.

BUCKLEY: ... mind the punishment -- to deal with.

There are a lot of people that are just getting by in our industry. Our industry is very competitive. There's a lot of -- you know, a lot of single mothers, a lot of small family-run companies that this is actually going to bother them.

KAGAN: Our time is short. The vote is September 16, coming up here in a couple weeks. Does it look like it's going to pass?

BURBANK: Absolutely, because I think Seattle likes -- want to have 10 cents for kids. And my friend over here, you know the -- his company has had sales increases from $2 million to $3.5 million projected this year.

So, this is something that we can afford to do. And especially when we have kids, 2,400 kids in our city are prevented from participating in Head Start because there's not the funding for them. And these are kids in need. We can't afford to leave them out anymore. That's what this tax is all about, and that's what this initiative is all about.

KAGAN: And with that, we will let you, gentlemen, settle this over a cup of coffee. Thank you.

BURBANK: Thank you.

BUCKLEY: Thank you.

KAGAN: Thank you for both sides of the debate. We appreciate it. And I like a tall cappuccino with a lot of sugar. Thank you so much.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.