Independent Grocer Memo: New York's 7,000 Bodega (Small Grocery) Store Owners Say 'No' to Proposed 18% Tax Hike On Juice Drinks and Soda Pop

Sweet Grocery, pictured above, is a classic, old school Latino family-owned New York City bodega. The name bodega came from these classic stores, mostly started and operated by immigrants in the city's Latino neighborhoods. A distinctive design feature of an original bodega is the calssic metal sign like the one on Sweet Grocery above. Today the term bodega is used in New York City to describe a small grocery store regardless of it look. And most today look just like a typical urban, small grocery store looks. The photograph above was taken by New York City artist Josh Goldstein. His art is inspired by New York City's many bodegas. Josh Goldstien even has a Web site "BodegaNYC,' where he showcases and sells his bodega inspired art, and offers observations about the stores and the city. You can view the Web site and Josh Goldstein's bodega-inspired art here.

The "Bodega (small grocery store) Association of the United States," which is based in New York City and represents 7,000 independent grocery store owners in New York state, according to its Web site, most which independently own and operate small stores or bodegas in New York City, has joined a fast-growing coalition that's fighting New York State legislation that would slap an 18% sales tax hike on juice drinks and soda pop sold at food, grocery, convenience and other stores in the Empire State.

The anti-soda pop and juice drink tax-hike coalition called "New Yorkers Against Unfair Taxes," says it has thus far signed up 90 New York business and citizen's groups in its efforts to stop the proposed legislation. The coalition also says it has so far obtained the signatures of 5,400 New Yorkers in a petition drive it's launched to demonstrate voter opposition to the new tax. [You can view group's petition Web site at the link here.]

Today the anti-juice drink and soda pop tax increase coalition turned up the heat on its campaign in New York City by staging a rally at the Fine Fare supermarket, which is at 1239 St. Nicholas Ave at 172nd Street, in New York City. The store is a branch of the New York-based 50 store Fine Fare supermarket chain.

It's estimated there are about 25,000 grocery stores in New York State, the majority of which are small stores or bodegas, many averaging only a few hundred square feet in size. The highest concentration of those small, independently-owned grocery markets is in New York City. For those who've never visited the Big Apple, there are generally two or three, and often more, of these bodegas on every block.

Here's what Nelson Eusebio, the chairman of "New Yorkers Against Unfair Taxes," says about the "Bodega Association of the United States" joining the coalition: "The exorbitant cost of doing business in New York has already taken a major toll on the state's small supermarkets and neighborhood bodegas, with more than 2,300 bodegas closing over the past four years, representing a loss of more than 8,500 jobs. The inclusion of the Bodega Association of the United States is particularly significant, given its representation of more than 11,000 bodegas throughout the state of New York. (Note: the bodega association's Web site says it represents the interests of 7,000 grocery stores rather than 11,000. So we are using that number.)

Walking around most any neighborhood in the five boroughs, you will see an iron gate where a storefront used to be. In addition to the bodegas, more than one-third of our city's supermarket owners have had to close their doors in the past five years. I'm proud of the way New Yorkers have come together through this coalition to protect this industry and preserve our communities, and we will continue to press forward to defeat this tax," he adds.

Ramon Murphy, the president of the 7,000-member association of small grocery store owners says: "Every week a bodega closes down as a result of the current economic conditions, and this proposed tax could lead to even more family-owned businesses having to shut their doors forever," said Ramon Murphy, President of the Bodega Association of the United States. "We've joined the coalition to prevent this from destroying our livelihoods, and the communities built around these businesses."

The new, proposed 18% sales tax hike will be in addition to the sales tax New York state consumers already pay on the juice and soda drinks. If the legislation is passed, New Yorkers will pay about a 25-30% sales tax on the retail price of the drinks.

The "New Yorkers Against Unfair Taxes" coalition includes in its membership, in addition to the Bodega Association of the United States: The Food Industry Alliance of New York State, which represents supermarket chains and independents in the state; Gristedes supermarket chain; New York Association of Convenience Stores; New York State Restaurant Association, New York State Automatic Vending Association; which represents companies in the vending machine business; Coca-Cola Bottling Company of Buffalo, New York; Polar Beverage Company; Dan's Supreme Supermarkets, Inc., a chain of independent supermarkets in the state; Grocery Manufacturers Association, the national trade group for U.S. grocery product manufacturers; The Coca-Cola Company-Glaceau; National Restaurant Association; Hispanic Chamber of Commerce (many of New York's bodegas are owned by Hispanic Americans, particularly those of Puerto Rican nationality); National Puerto Rican Coalition; and numerous other associations and businesses, including many individual grocery stores and restaurants. [You can read a full list of the members on the anti-tax hike coalitions Web site here.]

New York's Democratic Governor, David Paterson, and the majority Democratic legislature in the state capital in Albany are struggling to find ways to cut expenses and raise revenues because of the state's massive budget deficit. Much of New York's tax revenue depends on Wall Street and the state income taxes paid by the highly paid financial services industry workers who work on the street, according to data Governor Paterson recently presented.

The financial industry crash, and all of the value taken out of the big banks and investment firms, combined with the many layoffs in the industry, have reduced New York state's income tax revenue by double-digit percentages. As a result, the Governor and the state legislature has cut tens of millions of dollars worth of programs, are cutting more, and are searching for new revenue by proposing tax increases like the 18% sales tax-hike on soda pop and juice drinks.

New York city's bodega owners are an important group and can be very affective politically in the state, particularly in New York City. Since they operate thousands of retail stores -- stores where the windows will be plastered with anti-juice drink and soda pop tax-hike signs and where daily the grocers can collectively tell tens of thousands of people about their anti-tax position -- the store owners will be a powerful "retail politics-oriented" force in the coalition's campaign to defeat the proposed legislation.

The anti-juice drink and soda pop tax-hike coalition is planning more rallies like the one held today at the Fine Fare supermarket. A major focus of the anti-tax hike campaign is to highlight what the coalition argues will be the loss of many more jobs at a time of massive job loss already in New York and throughout the U.S. if the tax hike passes.

Of course, the people of New York and the rest of the country want and need added services -- unemployment insurance, medical assistance, ect. -- because of the current unemployment situation.

And it is here where nobody has the answer: In this recession, states like New York and California (and many others) are going broke, hundreds of thousands of people are losing their jobs each month (perhaps 700,00 this month alone), and the demand for government services is way up but tax revenue is way down. There really are only two things state governments can do in some combination -- cut programs and thus expenses and raise revenue (taxes).

Unlike the U.S. federal government, most states in the U.S. can't borrow their way out of the mess because they have state laws that require them to balance the budget. New York and California both have laws that require this.

So it comes down to this: Does a state cut all of its vital services until it can balance the budget in these times when more and more people are demanding those services? Does it raise taxes, like with the juice drink and soda pop tax hike? Or does it try to do some of both: Cut programs as much as feasible and raise taxes in a way that focuses on things like consumption rather than payroll taxes or income tax.

That answer depends on where you sit, we suspect. And for New York's food and grocery retailers, they are sitting, actually standing most of the time, in the position of being the ones that feel they will be most impacted, along with the state's juice drink and soda pop drinkers, by the proposed 18% tax hike on the drinks. Therefore they oppose the legislation.