The City Council of Toronto was bombarded because they passed a proposal that will require a 5 cent tax on every bottled water product offered in the metropolis and 10 cents tax on all imported bottled water coming from places outside the province. Companies in the custom labeled bottled water industry quickly issued a series of e-mails and public statements requesting that the proposal be categorically declined. The city council in return said that they will be reviewing the matter.
In the middle of all tempers, the companies lost their battle. In the end, the bottled water business is possibly among the fastest expanding enterprise and definitely one of the most lucrative of the consumables market. Additionally, it truly is called among the least controlled sectors in the nation.
In fact, bottled water firms pay little for bottling and selling water. For example, Ice River Springs close to Feversham, Ontario, provides bottled water for Loblaws, Wal-Mart, and Shoppers Mart. The company has a 10-year license to extract up to 1 million liters of water each day for its operations for bottled water. Even so, the business paid only $3,000 to the Ontario government for this relatively endless flow of freshwater.
Taxes on Bottled Water
What other industries in this country have paid little for the main resources used in the production of their products? At least the oil, mining and forestry industries need to pay royalties to the government for the raw materials they draw out.
For the end users, this has also led to price fraud problems for bottled water leaders. In fact, the cost of tap water for public delivery is only a small fraction of the price of bottled water, it depends on the water fee in different jurisdictions. More importantly, tap water is screened more regularly than bottled water and no evidence that bottled water is actually safer and healthier as compared to tap water.
As outlined by industry experts, the profitable bottled water sales margin is as high as 35% after considering all manufacturing, product packaging and marketing expenses. For large residential and shipping containers, the estimated profit margin is 60%. Moreover, for soft drink leaders, the profit of bottled water has become twice that of carbonated beverages.
No wonder city officials want to tax the sale of bottled water. But the product itself should not be taxed. As critics have stated, the metropolis need to establish a new supplemental tax bureaucracy that would actually undermine the purpose.