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Juice tax change stirs discontent
By KRIS HUNDLEY, Times Staff Writer The Florida Department of Citrus may have sparked a trade war with California in an effort to head off one with Brazil. It began with a 32-year-old tax on citrus concentrate imported from other countries. The concentrate is blended with Florida juice to improve its color and to make up for shortfalls in supply. Interestingly, the proceeds from the tax are used by the state citrus department to market "100 percent" Florida orange juice. Over the years, the tax has not been imposed on juice imported for blending from California, Texas and Arizona. But five foreign citrus juice importers filed suit in Polk County, where a judge in March declared the tax discriminatory. And Brazil, the world's leading producer of orange juice, has threatened a formal complaint about the tax to the World Trade Organization. To head off discrimination complaints, the state Legislature, at the urging of the citrus department, passed an amendment March 22 that would expand the tax to apply to juice imported from other states. That has growers in those states hopping mad. "We're against it," said Mike Wootton, a spokesman for Sunkist, the California citrus marketing cooperative owned by 6,000 growers in California, Arizona and Texas. "We don't like being taxed and we wouldn't derive any benefit from the tax; it's used to tout Florida juice." That's exactly the point made in lawsuits filed in Polk County in 2000 and 2001 by five international companies that import foreign concentrate: Tampa Juice Service Inc., Louis Dreyfus Citrus Inc., Cargill Citro-America Inc., Pasco Beverage Co. Inc. and Votorantim International Inc. Kristen Gunter, the Lakeland lawyer who represents the importers, estimates that her clients account for half of the 32-million gallons of juice concentrate imported into Florida last year. Brazil is the largest source, but the concentrate also comes from Mexico and Costa Rica. Gunter said the tax amounts to about 3 cents on a gallon of single-strength juice. Based on concentrated juice imports, she said, the state collects $3.5-million to $4.5-million a year. The revenues are not used to market the blended juice, which appears in grocery stores as frozen concentrate or juice from concentrate. Instead, it underwrites promotion of "100 percent Florida orange juice." "Most everybody understands that it might be a little unfair to take money from taxpayers to promote their competitors' products," Gunter said. "Nobody's said they think that's a fair situation." The legislative action came after U.S. Trade Representative Robert Zoellick warned Gov. Jeb Bush in March that the United States would have a difficult time defending the tax against a Brazilian challenge. The amended tax law -- extended to citrus from other states -- hasn't been sent to Gov. Bush. But two weeks ago, the governor told citrus industry executives that he intends to sign it. "The amendment addresses Brazil's main concern, that we don't tax domestic citrus," said Lisa Gates, a spokeswoman for Bush. "The thought is that if we're able to sign this bill, Brazil may withdraw its complaint. We're hopeful that this will be resolved, either by way of legislation or resolved in our favor in the World Trade Organization." Gunter thinks that's unlikely. She says U.S. and Brazilian trade representatives are scheduled to discuss the tax this week in Geneva as a preliminary step to lodging an official complaint. And Polk County Circuit Judge Dennis Maloney may rule this week on a request for an injunction to stop collection of the tax. The state has until July 1 to propose a remedy to the court. Gunter says the only remedy would be a refund of the tax, which she estimates could be close to $10-million for her clients over the past five years. Meanwhile, Florida has alienated California citrus growers so much they're talking about imposing a reciprocal tax on Florida juice. That has drawn a response from Bob Crawford, executive director of the citrus department. He's headed to California to talk to growers this week. "We know they're not happy. We liked the exemption too," he said. "We hope we can work together on some joint promotions of orange juice that will benefit both California and Florida." -- Information from Times wires was used in this report. Kris Hundley can be reached at hundley@sptimes.com or (727)892-2996.
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From the Times Business report
From the AP
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