Iowa Beverage Container Deposit Law

Under Iowa’s bottle bill, beverage dealers or redemption centers are entitled to a 1-cent handling fee for every empty deposit container that they redeem. The handling fee is a tax and is paid by beverage distributors and represents a significant part of the cost of operating the deposit/refund system. Some are now arguing that the handling fee should be increased. It is a flawed approach that focuses only on “carbonated beverages” and it hurts Iowa businesses. A better approach is for the state to encourage curbside collection of all recylables.

A Handling Fee Increase is a Tax Increase

Faced with a new tax, distributors would pass the increase on to their retail customers, who will pass the tax on to Iowa consumers. The increase would be hidden in the price of the products. The tax is especially unfair because it would apply only to carbonated beverages. The solution is for a comprehensive curbside approach to keeping Iowa clean. 

A New Beverage Tax Would Be Bad for Consumers and Businesses

Iowa is the only one of the contiguous midwestern states that has a forced deposit law.

Iowa’s deposit law is costly to the beer industry. In 2005, other costs and fees amounted to $8.6 million for Iowa’s beer industry.

Iowa consumers already pay more for “carbonated” beverages because of the deposit and related costs of the bottle bill.

Raising beverage costs further will adversely affect businesses in border areas of the state, which already lose business to neighboring states where no deposit is charged.

Attempts to increase the handling fee for the purpose of subsidizing the redemption centers would amount to taxing one industry segment to support another – this was never the intent of the law. An increase of one penny would amount to a $20 million subsidy for a small number of redemption centers who would face new competition from wholesalers and distributors who would compete with the existing redemption centers. 

Follow the Nickel - The Economics of Redemption