CHAIRMAN'S Letter

December 1, 2007
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Chairman’s Letter

Déjà Vu
 All Over Again
For the past several months, the Snack Food Association has focused on Capitol Hill, where the new Farm Bill has been under negotiation in the Senate after having been approved by the House of Representatives.
More than 200 amendments were offered, ranging from farm and crop issues to nutrition to energy and even tax policy. SFA president & CEO Jim McCarthy and government relations advisor Mike Torrey have been staying on top of these developments, working behind the scenes and with other groups to avoid any provisions directly harmful to the snack food industry.
So far, so good.
Meanwhile, in Annapolis, Md., state legislators were considering new taxes to overcome a billion-dollar-plus state budget shortfall. One of the major components was a boost in the sales tax from five cents to six. On the table was a proposal to include a selection of snack food products in the sales tax. It would be similar to the tax Maryland enacted in 1994, which we worked to successfully repeal in 1996.  
As we do every time a state snack tax is proposed, the SFA mobilized to combat the Maryland proposal. Daryl Thomas of Herr’s along with McCarthy and representatives of other affected companies met in Annapolis with members of the House of Delegates to oppose this tax. Many other SFA members also responded in opposition to the tax.
Then, on Nov. 3, Jim testified before the Maryland House of Delegates Ways and Means Committee and explained why considering a selective tax on certain snack foods was a terrible idea.
He pointed out that such actions in the past have proved to be disastrous. California, the first state to enact a snack tax in 1991, tried to devise a levy on some foods that they considered snacks while leaving other similar snacks untaxed. This caused great confusion for retailers attempting to collect the tax and for consumers who were equally confused.
The tax, as it was imposed in California and later in Maine, Maryland and the District of Columbia, also was regressive because it diminished the purchasing power of lower-income consumers who buy snack food products for their lunch boxes or as a special treat. The tax, he added, is arbitrary, because many foods much higher in fat, sodium and calories are left untaxed. Take Brie or liver pate, for example!
Jim’s message was simple: Consider the negative ramifications of this kind of taxation before heading down this wrong path again. He pointed out that many snack companies — such as Frito-Lay, Inc., Utz Quality Foods, Inc. and Herr Foods, Inc. — do business and sell products in Maryland, as well as employ citizens there.
The state legislature acted. It passed a comprehensive budget plan, and the snack tax was NOT included.
This illustrates how important it is for our association to stay on top of issues like this — even when our attention is focused, as it should be, on Capitol Hill. And it shows how essential the SFA’s government relations and SnackPAC activities are to our industry — especially as the political climate changes over the coming year.
At SNAXPO in San Antonio, Tex. in March, we will have a special SnackPAC event and a special briefing for senior industry executives to discuss important legislative and regulatory issues and the outlook for 2008. As always, we will continue to keep our members informed. Please plan to participate at these special meetings at SNAXPO. Your involvement and participation has never been more important.
Sincerely,
Tom Dempsey
SFA Chairman

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