April 29, 2008
Bottle fraud has to be curtailed
Cross-border sales are bleeding Maine distributors
It is not rare for residents of Maine who live near their state's border with New Hampshire to do some of their shopping in the Granite State. The nearer the border, the greater the likelihood of cross-border sales.
It's been going on for decades — for as long as Maine has imposed a tax on sales and for as long as there has been a wide gap in the levels of the tax on cigarettes.
Cross-border sales are nettlesome and every now and then Maine officials attempt a crackdown. But it has been like trying to harness smoke in an open field on a windy day — especially in an environment in which the monitoring of traffic has been historically discouraged by New Hampshire officials.
More recently, the eyes of Maine's enforcement agencies have turned to the traffic in bottle recycling.
Maine law requires the distributors to pay 5 cents per container when they import beverages into the state. The levies are passed on to consumers at the retail level, but the consumer recovers the “deposits” when they return the containers — after which the distributors return them to the state with an additional 3 cents per container for processing.
The itch Maine has to scratch is the one connected with the losses distributors experience when the containers being returned are ones not purchased in Maine. The consumer hasn't paid the “deposit,” but the distributor gets hit for the cost of it anyway — along with the cost of doing business. It eventually results in the cost of the product rising in Maine.
The consumer who buys his beverages in New Hampshire and surrenders the empty container in Maine benefits on both ends. The purchase costs less because there is no “deposit,” and the nondeposit is picked up when the containers are redeemed in the state that requires it.
Adding to Maine's problem is the state's recently expanded bottle bill. It now allows deposit on any disposable, ready-to-drink-container on the market, from aluminum to plastic or liquor bottles to those for infant formula or milk.
It's not the nickel-and-dime slippage that is causing concerns in Augusta. It's when the empties are brought in by the tractor-trailer load that gets the “revenooers” antsy.
Hal Prince, director of Maine's Division of Quality Assurance and Regulation at the Department of Agriculture, Food and Rural Sources, has identified the wholesale nature of the fraud for what it is: “We've found tractor-trailer loads coming into the state. We've had vans, pickup trucks. You name it, we've found it,” he was reported as saying last week.
When the volume of the fraud is as large as it is — one as large as $5 million a year — something has to be done.
There are fines for importing and redeeming containers bought elsewhere than Maine — $100 a bottle or $25,000, whichever is greater. But if the problem is as great as it has been described and Maine authorities are still concerned, they have to be allowed to do more and be given the resources to do so.
Maine can't simply shrug its shoulders and let the distributors pick up the tab. To do so would be disingenuous. It's a situation in which the state owes the distributors greater protection under the law. You can bet a 12-pack of your favorite soft drink that the state would apply greater due diligence if the losses were being shifted directly to the shoulders of Maine taxpayers.
Treat the problem as if it were a statewide problem — one that reaches into the pockets of every consumer and taxpayer in the Pine Tree State.