Will Soda Industry have Allies in Fight Against New Tax Proposal?

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

Doctors and dentists filed a tax increase initiative on sugary drinks for the 2020 ballot. Naturally, the soda industry is opposed. The question is will they have allies in this fight to oppose the measure if it makes the ballot? Follow the twisting path of the battle over soda taxes to understand the reason this question is fairly asked.

Business and taxpayer groups were working with the soda industry to push a ballot initiative for the 2018 election to strengthen the two-thirds vote requirement on local tax measures. Each organization had reasons for supporting the initiative and they were working in unison on the measure. Since a number of municipalities already passed a soda tax and others threatened to do so, the main funding for this measure to make it harder to raise taxes came from the soda industry.

Soda and other sugary drinks are a target for taxes by those who want to reduce the use of sugary drinks for health reasons or those who want to find another source of revenue for local governments.

Suddenly, the push behind the stronger two-thirds vote requirement for local taxes was derailed. The soda industry cut its own deal in the legislature agreeing to pull support for the proposed vote toughening measure called “The Tax Fairness, Transparency and Accountability Act” in return for a last minute bill that would prohibit any soda/sugary drink taxes in local jurisdictions for a dozen years.

Legislators and even the governor grumbled about the bill, AB 872, but they were convinced that the two-thirds vote measure headed up by the California Business Roundtable would severely reduce local governments’ ability to raise all kinds of taxes. AB 872 was signed into law and “The Tax Fairness, Transparency and Accountability Act” initiative stalled out.

A tax increase on soda was not the only reason the initiative had gained support from business and taxpayer groups. Other industries were concerned they could soon fall under the gaze of tax raisers while some wanted to forestall application of a California Supreme Court ruling, California Cannabis Coalition vs. City of Upland, whose interpretation could make it easier to raise taxes without a supermajority vote.

Many of the business and taxpayers groups supporting “The Tax Fairness, Transparency and Accountability Act” were not aware of the negotiations that brought about the bill to freeze soda/sugary drink taxes until right before the deal became public.

In response to AB 872, the state doctor and dental associations filed the initiative to raise statewide taxes on sugary drinks and allow for local governments to raise soda/sugary drink taxes as well thus overturning the legislative solution that became law with AB 872.

I’ve been told by supporters of the Business Roundtable initiative that they were not happy that the initiative was scuttled. Expect more back room negotiations to find a deal on the soda tax. But if the tax increase measure makes the ballot, will the business and taxpayer groups join an offensive to help defeat it after the grand strategy of “The Tax Fairness, Transparency and Accountability Act” was spoiled?

This could very well be another example of a concern I have expressed in the past about the business community.

Challenge a specific business or industry in the political arena and they will respond fiercely. But suggest a long-term campaign of espousing the virtues of a better business climate or having businesses coordinate an overarching joint business campaign and there are few or no takers.

It is possible the soda industry might find itself alone on the ballot initiative battlefield in 2020.

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