Coffee capital eyes tax on 'designer drinks'

Wendy Lippmann, a yoga teacher with a measured Buddhist comportment on most issues, suddenly turns vehement. "It's a nonsequitur that makes no sense!" she says. Susan Balshor, a sculptor who ordinarily shuns politics, fulminates for three minutes. Finally, she concludes: "This must be unconstitutional."

Yet Jay Nombalais, a carpenter, shrugs it off like a man who has learned patience from years of trying to get miter joints to fit. "It's only a dime, for heaven's sake," he says.

Technically, Mr. Nombalais is correct. But here in the Land of Starbucks, 10 cents is clearly not "only a dime" when it comes to a possible tax on espresso - the unofficial nectar of the Northwest. An upcoming public vote on whether to levy a 10-cent tax on "designer coffee drinks" is producing a debate of caffeinated intensity in what is supposed to be an easygoing city.

The measure, on the Sept. 16 ballot, seeks to boost funding for prekindergarten programs with all those dimes, which proponents say will total $7 million annually.

It divisiveness is perhaps not surprising. After all, Initiative 77 asks residents of Seattle, one of America's premier middle-class cities, to choose seemingly between two middle-class totems: those beloved drinks with the beehive of whipped cream or early grounding for their kids in Puccini and 500-piece puzzles. This is not to mention the class issue that can come up as a subtext: The measure would only tax latte and other expensive Starbucks-type drinks, not tea, cocoa, or regular drip coffee.

"It should be the other way around," snaps Ms. Lippmann, who drinks a double short breve daily. "People should be penalized for drinking bad coffee, not espresso."

In one sense, the so-called latte tax - or, as proponents position it, the Early Learning and Care Initiative - is just one more creative or perhaps desperate attempt to find money for important programs in a rare moment of penury. Amid one of the worst budget crises in a quarter century, cities across the country are increasingly turning to what could be called designer taxes: specific levies imposed for specific programs.

Some communities, for instance, are increasing local taxes to help pay for libraries. Others are tailoring levies to bankroll local schools. In New York, one lawmaker proposed putting a tax on junk foods to pay for obesity prevention programs for kids.

But boosting the tax on coffee in Seattle is like putting a surcharge on lobster bisque in Boston or tofu in Los Angeles. It is testing Seattle's legendary liberalism - a gauge of just how much taxation locals are willing to endure for a seemingly good cause.

"We've been hit by cut after cut after cut by administrations at the federal level and the state level - who, by their actions, don't support children," says John Burbank, executive director of the Economic Opportunity Institute, a Northwest think tank dedicated to bolstering the middle class. "This comes at a time these same authorities are demanding better academic performance from kids." Mr. Burbank, who conceived of the initiative, says actions of both President Bush and Washington Gov. Gary Locke are making improved academic achievement "impossible," adding: "If you believe in kids, then a dime is very little to ask."

Voluminous research summarized by the Northwest Regional Education Lab, a nonprofit organization funded by the US Department of Education, concludes that low-income, at-risk children who have access to prekindergarten programs fare significantly better when they eventually enter school than peers denied such preparation.

Jennifer Smith, a Seattle occupational therapist, says early learning programs provide essential social skills that ordinarily are taught at home. Increasingly, she says, troubled families lack the time or skills to pass along such basics. "If you don't learn to sit still in your chair, then how can you pay attention to the teacher and learn anything?" she asks. "If you don't know how to share or wait your turn in line, you're not going to do very well in a classroom."

Initiative 77's opponents don't dispute these arguments. In fact, they say, early learning programs deserve public support. What they oppose is taxing espresso to fund them. "Child care is too important to be dependent on something as random as the espresso tax," says Stephanie Bowman, spokeswoman for Joined in Opposing the Latte Tax (JOLT), a coalition funded by Starbucks, some espresso vendors, the state restaurant association, and the Greater Seattle Chamber of Commerce.

Burbank counters that JOLT's stated support for early learning programs might seem more genuine if the business community had a record of supporting education funding. Just a month ago, he notes, the chamber and its allies successfully lobbied state government to reduce operating budgets, including education funds, arguing that the economy could support no new taxes.

Ms. Bowman calls the espresso tax "silly," pointing out that studies show the money raised by the tax will be less than proponents claim, between $1 million and $3 million. Do the numbers, she says: To raise the $7 million that initiative backers claim the tax will generate means Seattle coffee purveyors will sell "70 million espresso drinks a year. That's just ridiculous."

"Actually, our numbers were conservative," Burbank counters, pointing to one Starbucks location that pulls 1,000 shots of espresso daily. Given all the espresso counters in Seattle, Burbank figures people here buy 200,000 such drinks - a day.

The politics of latte taxes is certainly enlivening the coffee-house culture here. "Why tax espresso if we won't tax SUVs?" grumbles Lippmann, the yogini. "This is a luxury tax on the middle class."

"I'm all for luxury taxes," counters Nombalais. "We certainly have enough poor taxes - the sales tax, the lottery."

It's more the principle than the economics for Ms. Balshor: "This is singling out one group - coffee drinkers - and making them pay. Why not tax chocolate-eaters?"

Nombalais, however, swings from his wallet: "If you can afford $2.50 for a latte, you an afford 10 cents for kids."

On that point, Mette Hanson agrees: "I'd pay 20 cents," says the designer of zoo exhibits. "If there's an opportunity to partake of a decadence and also support basic social needs, I'm all for it."