McKee opposes levy on sugary beverages; PPP tax threshold under review

PROVIDENCE – Gov. Daniel J. McKee on Tuesday said he opposes legislation in the General Assembly calling for a 1.5-cent-per-ounce tax on bottled and canned sugary drinks.

He also suggested, for the first time, that he might be open to changes in his own proposal to tax Paycheck Protection Program loans greater than $150,000.

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“I’ve taken the position that I don’t think it’s the year to talk about increased taxes anywhere,” said McKee during his biweekly press conference at the Statehouse. “This is not the year, whether it is the state income tax [legislation], in my opinion, or any other taxes right now that [are] going to hit the consumer in a way that takes more money out of their pockets.” McKee was referring to four pieces of legislation pending in the legislature that would add an income tax bracket for state income taxation.

Matching bills in the House and Senate are calling for the sugary beverage tax, with support from the Rhode Island Public Health Institute, Rhode Island Medical Society and the American Heart Association.

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Those groups say sugary beverages add to the state’s obesity problem, particularly among children, and part of the tax revenue would be used to pay for a Supplemental Nutrition Assistance Program that gives recipients a 50% reduction in the cost of buying fruits and vegetables.

But local food and beverage industry groups argue that the tax will hurt consumers who struggled with hardship during the pandemic, and it might push them to shop in neighboring Massachusetts, which could be damaging to Rhode Island retailers.

McKee on Tuesday also said he still supports taxing Paycheck Protection Program loans greater than $150,000. But he added his administration is also exploring how businesses would be affected at different thresholds than $150,000.

“We’re running around some numbers in terms of what the impact would be on certain thresholds and we’re sharing that with the General Assembly right now,” said McKee. “We created a threshold that supports 90% of the people that applied for PPP loans.”

The R.I. Business Coalition continues to oppose the tax and held a rally-like event Monday to express their concerns that it is an unfair burden on many businesses amid a pandemic.

McKee said his position continues to be that “this is a budget issue with a cap of $150,000. Right now we’re in discussions with the General Assembly.”

“Budgets are not easy,” added McKee. “And having gone through 12 as a mayor, you can’t satisfy everybody. But, you have to balance the budget.”

Cassius Shuman is a PBN staff writer. Contact him at Shuman@PBN.com.