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Measure H, which will tax local businesses for soda sales, is on the November 6th ballot
The beverage industry and local businesses unite in discontent over proposed El Monte soda tax.
The American Beverage Association is at it again, this time spending a whopping $1.5 million to oppose a soda tax on the November 6th ballot in the Los Angeles area.
Measure H is the newest bill supporting the fight against sugary drinks in El Monte, Calif. Some estimate the new tax would bring in $3 to $7 million per year for the city’s general fund. In a city with the ninth highest obesity rate in California, El Monte mayor Andre Quintero insists on the necessity of the bill.
“We’re trying to find a way to solve two public policy objectives,” Quintero said. “One: to raise revenue for the community. And two: to be able to put a tax on products that have been shown to be linked to obesity.”
So far, the American Beverage Association has put forth $850,000 to stop the beverage tax, an amount that is more than 20 times larger than the monetary efforts of the beverage tax advocates. The beverage industry isn’t the only group worried over the new tax; local businesses fear the detriment to their livelihood if the bill is passed.
How loudly will the beverage industry’s money speak to voters? We’ll have to wait until November to see.
Taxes on sugar-sweetened beverages (SSBs), sometimes called soda taxes, are rising in popularity – but not without controversy. These taxes aim to improve health by reducing sugar intake while generating revenue for government initiatives. However, opponents of the beverage taxes argue that they don’t work or are an example of governmental overreach. To hinder the rising popularity of SSB taxes, these opponents have enacted a new strategy called “preemption.”
Preemption prevents state and local governments from passing certain laws. In this case, states have passed preemption laws that prohibit cities from enacting taxes on sugar-sweetened beverages. Preemption has previously been used by the tobacco and firearm industries – 45 states have laws affecting the ability of cities to enact gun control laws, and twelve states preempt smoke-free laws. Beyond SSB taxes, states are using preemption to control legislation over things like e-cigarettes, paid sick days, and fire sprinklers. At a higher level, the federal government is also able to preempt states from passing certain laws.
This June, California banned any new food or beverage taxes until 2031, and Arizona and Michigan have recently preempted beverage taxes. The California preemption appears to be the result of the beverage industry’s financial backing of a ballot initiative threatening to negate any local tax passed in 2018 with less than a two-thirds supermajority. Passage of this initiative would have resulted in many localities losing essential revenue, so the legislature passed the food and beverage tax preemption as an alternative. As of our latest check, Oregon and Washington have also introduced preemption ballot measures.
Sugar-sweetened beverages contribute the largest amount of sugar to the American diet, accounting for 6.5% of adults’ total daily calories. Consumption is linked to obesity, type 2 diabetes, heart disease, and tooth decay. Given the lack of nutritional value in sugary beverages, public health experts have zeroed in on reducing their intake as a way of combatting the rise of obesity and type 2 diabetes.
Taxes that raise the shelf price of sugar-sweetened beverages are one way to discourage consumption. In its first year, Berkeley’s penny-per-ounce tax reduced consumption by 10% and generated $1.4 million in revenue. In Mexico, a peso-per-liter tax led to a 7.6% decline in purchases.
In total, there are eight national SSB taxes in effect:
- Berkeley (2015)
- Navajo Nation (2015)
- Philadelphia (2017)
- Oakland (2017)
- Boulder (2017)
- Albany (2017)
- San Francisco (2018)
- Seattle (2018)
- Cook County (2017 - repealed)
Additionally, 33 countries around the world have passed soda taxes: Finland, Northern Mariana Islands, Norway, Samoa, French Polynesia, Nauru, Hungary, Fiji, France, Tonga, Mauritius, Vanuatu, USA, St. Helena, Mexico, Kiribati, Dominica, Chile, Barbados, Belgium, UAE, Catalonia, Spain, Saudi Arabia, Portugal, Brunei, Thailand, UK, South Africa, Philippines, Ireland, Peru, Estonia, and Bermuda.
Though preemption laws are limiting the spread of this important public health effort, many voters will have the chance to influence the future of soda taxes at the polls this November. Learning the platforms of potential state legislators will be critical in determining if these laws might be implemented.
Even where city-wide soda taxes are prohibited, local institutions can still work to reduce the prevalence of sugary beverages. SugarScience’s guide offers a resource kit for promoting healthy beverage consumption at your organization.
What Is the Soda Tax?
The soda tax is something like a sales tax specifically aimed at one type of product, and it's charged on top of any sales tax that's already being imposed. The tax doesn't apply just to sodas, at least not in all cities that collect it. The drink doesn't even necessarily have to contain sugar. Some cities include drinks made with artificial sweeteners.
Sports drink enthusiasts can get hit with this tax as well. Baby formula is generally exempt, and you shouldn't have to worry if you ask for sugar in your coffee-to-go. But a Starbucks’ Frappuccino will most likely be taxed because it’s actually created with sugar. Some cities spare alcohol, too, because it’s already been taxed.
The soda tax is effectively a "sin tax" in that it's imposed on something that's perceived to be unhealthy.
Most cities' taxes are aimed at sugar-sweetened drinks, but Philadelphia and Washington include "diet" beverages containing artificial sweeteners.
Eight cities collected this tax as of 2020:
- Berkeley, California
- Albany, California
- Oakland, California
- Philadelphia, Pennsylvania
- Boulder, Colorado
- San Francisco, California
- Seattle, Washington
- District of Columbia
California passed a state-wide ban on the soda tax in June 2018 that will remain in place for 12 years. It doesn't abolish the existing soda taxes, but it prohibits localities from instituting new ones during this time.
Chicago had a soda tax at one point, but it was repealed effective October 2017. Arizona and Michigan have issued rulings prohibiting local governments from enacting a soda tax.
Soda Industry Spent $67 Million Opposing State, City Soda Taxes & Warning Labels
Big Soda’s big three members—the American Beverage Association, Coca-Cola and PepsiCo—have spent a minimum of $67 million since 2009 to defeat soda taxes and warning labels in 19 cities and states, according to an analysis of lobbying and ballot initiative disclosure reports by the Center for the Science in the Public Interest.
On top of that, the industry trade association and two companies are spending upwards of $14 million a year at the federal level, where their public health objectives include opposition to a federal soda excise tax, the newly released and updated Nutrition Facts label with a line for added sugars, and the Dietary Guidelines for Americans, which proposed a quantitative limit—12 teaspoons a day—for added sugars.
Federal lobbying disclosure reports do not itemize expenditures by topic, but Big Soda went from spending around $1 million to $5 million a year in the early 2000s to a peak of $40 million in 2009 when Congress considered a soda tax to pay for healthcare reform.
“There is no better way to understand the public health importance of soda taxes and warning labels than to see how much money Big Soda is willing to spend to oppose them,” said CSPI health promotion policy director Jim O’Hara. “If those policies aren’t going to work like Big Soda says they won’t, why are they writing such massive checks?”
The Bay Area in California has been a hotbed of pro-soda-tax legislation—and a prime target for Big Soda’s open checkbook.
Soda-industry-funded ads in Oakland give the false impression that Measure HH levies a tax on all groceries. This one does not even mention soda.
In 2014, Big Soda spent more than $2.4 million in its unsuccessful attempt to defeat the Berkeley soda tax measure. It also spent $9.2 million in San Francisco, where a soda tax ballot initiative won 55 percent of the vote but failed to garner the two-thirds required. So far in 2016, Big Soda has spent more than $600,000 and $700,000 between January and June to oppose soda-tax ballot measures in San Francisco (which this time will require only majority support) and Oakland, respectively. According to one news report, the industry has reserved more than $9 million in television advertising for the final weeks of the San Francisco campaign.
The industry also continues its practice of hiring consultants with close ties to the local political establishment and to both liberals and conservatives. During the legislative session in California this year, they hired a lobbyist self-described as “the first and perhaps still the only lobbying firm owned by a Latina in California.” For its Bay Area campaigns, the soda industry hired David Binder Research, which previously worked for the Robert Wood Johnson Foundation and Michelle Obama’s Let’s Move! initiative.
This year also saw Big Soda spend more than $9.3 million in a failed attempt to defeat a 1.5-cent per ounce soda tax adopted by the Philadelphia City Council. The industry blanketed the city with more than $9 million in television and radio advertising and other paid media. Big Soda also hired a former council member as a lobbyist and enlisted consultants with close ties to the previous Democratic administration of Mayor Michael Nutter and the 2012 Obama campaign in Philadelphia.
A key difference this year is significant, if not comparable, financial support for the public health initiatives from philanthropists Michael Bloomberg and John and Laura Arnold, as well as the American Heart Association. In Philadelphia, Bloomberg, the Arnolds, and local supporters provided Philadelphians for a Fair Future with about a $2.2 million war chest, while the American Heart Association contributed about $334,000—meaning that Big Soda outspent public health advocates by only a 4 to 1 ratio.
To date, Oakland’s public health effort has raised slightly more than $800,000 from these sources as well as local advocates, and San Francisco’s just over $1 million.
Healthier Colorado, a local philanthropic foundation, has given more than $360,000 to Boulder, Colorado’s effort to pass a 2-cent-per-ounce tax.
A One-Cent Soda Tax Gets Expensive in California
In this most contentious of elections, you wouldn’t think that a soda tax would be the issue to attract the big bucks. But measures in just two California cities have drawn more money than that state’s Senate race and statewide referendums on marijuana legalization and gun control — combined.
Soda taxes are on the ballots in San Francisco and Oakland, Calif., and spending to persuade citizens to vote for or against them has topped $50 million — enough to buy every person in those two cities about 100 cans of Coke, at least if you bought them in bulk.
On the pro-tax side are big donations from billionaires: Michael Bloomberg, the former mayor of New York, and Laura and John Arnold. And opposing them are the companies in the deep-pocketed beverage industry, which is outspending them by a ratio of about 3 to 2.
The battle is the biggest so far by health advocates in their efforts to reduce the consumption of sugary carbonated soft drinks that they say leads to obesity, diabetes and tooth decay.
The idea of taxing sugar-sweetened beverages, which the measures would do, was initially an esoteric idea hashed out in medical journals. Some municipal officials showed interest, but, until recently, no soda tax got far. The failure of 40 tax measures around the country reflected public skepticism about the idea, often seen as a nanny-state intrusion. But it also reflected the lopsided investment of industry to defeat them.
Recently, the tide has begun to turn, helped in part by big donations from Mr. Bloomberg. Two years ago, Berkeley, Calif., became the first city in the country to pass such a tax. Mr. Bloomberg got involved late in the effort, when it became clear the law had a chance of passing. (San Francisco had its own failed soda-tax initiative that year it won a majority of votes but failed to clear a supermajority threshold, a bar it won’t need to clear this time.)
In June, Philadelphia passed its own soda tax through the City Council. The beverage industry spent about $10 million there, but Mr. Bloomberg weighed in too, contributing about $1.6 million of the $2.5 million spent to support the bill.
Albany, Calif., another community in the Bay Area, is also voting Tuesday, though there has been less direct spending there. Boulder, Colo., will vote on a 2-cent-per-ounce soda tax measure Tuesday. And Cook County, Ill., which includes Chicago, is to consider a soda tax measure later this month.
Public sentiment on soda is also shifting. Many Americans now say they are trying to avoid the products, and national sales of such drinks have been slipping.
The Bay Area initiatives are expensive prizes. Unlike Philadelphia, where much of the battle was fought through lobbying, both California tax proposals must win passage by a majority of voters. That means both sides have invested in big public outreach campaigns.
Citizens have been inundated with pro- and anti-soda tax TV and radio commercials, and mailboxes are filled with direct mail from both sides. Canvassers are making phone calls and going door to door in the final days of the campaign. Dan Newman, a political consultant with SCN Strategies, who is working on the pro-tax campaign, said the volume of messages about the measures dwarfs the 2014 effort.
“It was intense and expensive, and folks were amazed in talking about it,” he said of 2014. “And it was nothing like this.”
The tax battle has also prompted accusations of skulduggery. The soda industry enlisted the help of several local grocers to pose for mailers and state their opposition to the tax. Several of them, later approached by pro-tax advocates and reporters, said they had been misled about the nature of the tax proposal. Others have become the subjects of negative Yelp reviews and threatened with boycotts, what an anti-tax campaigner described as “intimidation.”
The measures are similar in both cities: They would impose a tax of one cent per ounce of any drink with added sugar, including sugary soft drinks, iced teas and smoothies. The taxes would be imposed on beverage distributors, not at the checkout registers. The emerging evidence from existing soda taxes suggests those higher prices will be passed through to retailers and then to shoppers. If they are, they could result in a price increase of 67 cents on a two-liter bottle, or $1.44 for a 12-pack.
Those higher prices are intended to discourage shoppers from consuming so many sugary drinks, which have been linked to obesity, diabetes and tooth decay. The pro-tax side has been emphasizing the negative health effects of soft-drink consumption, and arguing the tax will make the city’s children healthier.
Research from Mexico, which passed a national soda tax in 2014, shows that the taxes can drive down soda consumption. But it is not known yet whether those reductions will result in better health.
The industry argues that the taxes have no clear connection to public health and that they will fall disproportionately on low-income shoppers. In California, they have also been arguing that the taxes could result in higher prices for other items at the grocery store as retailers try to spread the rising wholesale cost of soft drinks over other products. But there is no research from Berkeley or Mexico that advocates could cite to support the notion.
A local coalition of anti-tax advocates, led by the American Beverage Association, a trade group for drink-makers, began sending direct mail months earlier than is typical for a ballot initiative.
Susan Neely, the association’s president, said her organization was committed to fighting soda taxes on every front. “We oppose them wherever they are introduced — that is a clear position that we have staked out,” she said. “That is not going to change.”
There has been little public polling on the measures, though consultants on both sides said they have been polling privately, and the vote will be close. The complexity of the city’s ballots this year makes predicting a result hard. In San Francisco, voters are considering more than 40 initiatives, including two separate measures about plastic shopping bags. The beverage tax is fairly far down on both ballots, which means some voters may grow fatigued and fail to weigh in.
'Big Gulp ban,' soda tax coming before California Legislature
1 of 2 (l-r) Friends Carlos Ramirez, 16 and Josue llamas, 15 buy Big Gulp sodas at 7-11 on Mission Street in San Francisco, California, on Monday, Feb. 18, 2019. Gabrielle Lurie / The Chronicle Show More Show Less
2 of 2 Meira Rose Lesle, 4 and her mother Alisa Dichter (right) get slurpees at 7-11 on Mission Street in San Francisco, California, on Monday, Feb. 18, 2019. Gabrielle Lurie / The Chronicle Show More Show Less
SACRAMENTO &mdash Months after the California Legislature reluctantly voted to ban cities from passing new soda taxes, Democratic lawmakers are taking another stab at a statewide fee and other measures to reduce consumption of sugary drinks.
The bills include a ban on &ldquoBig Gulp&rdquo-style sodas, warning labels and a prohibition on displaying sugary drinks in the grocery checkout aisle. They reflect a long-standing legislative push to address concerns over the health effects of sugar on young people, as well as Democratic lawmakers&rsquo lingering anger over the soda industry&rsquos political maneuvering.
&ldquoWe have an incredible public health crisis. Obesity and diabetes are at alarming rates, driven by the deception of Big Soda,&rdquo said Assemblyman David Chiu, D-San Francisco. &ldquoAnd certainly what happened last year didn&rsquot help.&rdquo
That&rsquos when the American Beverage Association, which is funded by companies including Coca-Cola and PepsiCo, spent more than $8 million on a ballot measure that would have raised the legal bar for cities and counties to pass any kind of tax.
Facing the prospect of an expensive electoral battle over an initiative that opponents argued would devastate local budgets, lawmakers agreed to a more limited proposal, preempting new local fees on sugary drinks through 2030. But they held their noses as they did so, decrying the deal as a &ldquoshakedown&rdquo by the soda industry and an abuse of the initiative process.
&ldquoThese kinds of regressive taxes are not supported by the people of California because they place an unfair burden on working families and neighborhood businesses already struggling with the state&rsquos high cost of living,&rdquo the American Beverage Association said in a statement. &ldquoWe are committed to working with the Legislature on effective ways to address its budgetary and public health concerns and to ensure that food and beverages remain affordable for all Californians.&rdquo
Backed by the California Medical Association and the California Dental Association, lawmakers will introduce five bills on Wednesday meant to encourage people to buy less soda and other sugary beverages such as energy drinks, sweet teas and sports drinks.
These are the leading source of added sugar in the American diet, according to the Centers for Disease Control and Prevention, and their consumption is associated with obesity, Type 2 diabetes, heart disease and tooth decay, among other health problems.
&ldquoIt&rsquos easier for youth and adults to consume more calories in this way, because you don&rsquot feel full in the same way you do if you eat an entire pie or a bunch of cookies,&rdquo said Dr. Shannon Udovic-Constant, a San Francisco pediatrician and vice chair of the California Medical Association board of trustees.
To block California soda taxes, companies paid for ‘Black Panther’ tickets, fancy dinners
Dinners at an expensive restaurant in Maui — with ocean views. Tickets to professional sports games. A free screening of “Black Panther” at a Sacramento IMAX theater. And a $250,000 donation to a group that funds the governor’s travel.
That’s just a sampling of the $11.8 million that soft drink companies and their lobbyists spent at the state and local levels in the last two years in California to block proposals such as taxing sugary beverages and slapping health warnings on their drinks, a California Healthline analysis found.
“They exercise extraordinary influence in this building,” state Sen. Bill Monning (D-Carmel) said of the industry. “We don’t underestimate the power of the opposition.”
Monning doesn’t accept soda industry money — and has tried repeatedly to tax sugary beverages in California and place warning labels on packaging. He was one of the most vocal critics last year when the industry blocked cities and counties from levying soda taxes — a maneuver some lawmakers described as “extortion.”
Angered by the industry’s tactics, Monning and other lawmakers now are pushing a package of bills to clamp down on drinks they say contribute to rising rates of obesity and diabetes. Several of the measures are scheduled for a committee hearing Tuesday, including one that would tax distributors of sugary drinks at 2 cents an ounce.
Connecticut, Massachusetts, New York, Rhode Island and Vermont also are considering statewide taxes on sugar-sweetened beverages. At least four states, including Arkansas and West Virginia, already impose taxes on sodas, either by the fluid ounce or on gross receipts, according to the National Conference of State Legislatures.
Although it’s anybody’s guess how much the industry will spend to sway California lawmakers this year, its previous largesse indicates money will flow to nearly every Capitol officeholder.
A California Healthline analysis found that 9 in 10 state senators and members of the Assembly, or a member of their staff, accepted a campaign contribution, gift or charitable donation in 2017 and 2018 from the American Beverage Assn. (or its political action committee), the Coca-Cola Co. or PepsiCo — the three largest givers in the industry.
The beverage industry, like other interest groups, spends money to influence lawmakers in several ways: It makes financial contributions to their campaigns and lobbies them and their staffs, sometimes plying them with meals, events and travel. It also donates to charities in lawmakers’ names.
“They follow the playbook of the tobacco industry in protecting their products from criticism, casting doubt on the science, lobbying, working behind the scenes, funding front groups, doing all the things that industries that make potential harmful products do,” said Marion Nestle, author of “Soda Politics” and a professor emerita of food nutrition at New York University.
The beverage association and Coca-Coca did not respond to specific questions about their political giving, and PepsiCo didn’t respond at all. William Dermody Jr., an ABA vice president, argued “excessive” taxes on drinks would harm the economy.
“It’s important to inform lawmakers about the contributions that our products make to the local economy, not only the millions in tax revenues we generate for the state but the wages we bolster for hundreds of thousands of California workers,” Dermody said in an email.
Big Soda is not alone in trying to influence lawmakers on the issue of sugary drinks.
The California Medical Assn. and the California Dental Assn., which represent doctors and dentists, are planning a ballot initiative to tax sugary drinks. Together they spent about $10.6 million in lobbying and campaign contributions to influence a broad range of health-related legislation over the last two years.
For the soda industry, 2017-18 was particularly expensive.
Why? As more California cities passed and proposed local taxes on sugary beverages, soda companies last year poured $8.9 million into a statewide ballot measure that would have made it more difficult for cities to levy any new tax, not just those on beverages. The money came from the American Beverage Assn. PAC, primarily funded by Coca-Cola, Pepsi and Dr Pepper Snapple Group.
Concerned that California voters would approve a higher voting threshold for all local taxes, lawmakers reluctantly banned local soda taxes until Jan. 1, 2031, if the industry dropped its ballot proposal.
“I don’t think they won any friends in the Legislature,” said Assemblywoman Lorena Gonzalez (D-San Diego). She received $11,000 in campaign contributions from the industry in the last two years, and has voted on its side against bills to label and tax sugary drinks, citing concerns that a soda tax is regressive and would harm poor, minority communities.
Entertaining lawmakers and their staffs
In 2017 and 2018, the American Beverage Assn. spent just over $1 million lobbying California policymakers, while PepsiCo spent $371,482 and Coca-Cola spent $352,469, according to forms filed with the California secretary of State’s office. That’s nearly 70 % more than they spent in the previous two years.
The bulk of the money went to lobbying firms staffed by former government employees — people with connections at the Capitol who know how to influence legislation.
The ABA spent $379 on food for eight lawmakers in November 2017 as part of an $813 dinner tab at the upscale Humble Market Kitchin restaurant in Maui — where a steak might go for $65 and a whole fried fish for $57. The lawmakers were attending a legislative retreat.
The association gave 11 legislative staffers tickets to Sacramento Kings basketball games and paid for their food and drinks, at a cost ranging from $163 to $326 per staffer. It also shelled out at least $3,747 for at least 92 lawmakers, staff members and their guests to attend a showing of “Black Panther” in March 2018.
Asked why Assemblywoman Sabrina Cervantes (D-Riverside) attended the movie, her spokeswoman said she is “supportive of the arts and celebrates diversity in cinema.”
The ABA’s biggest lobbying expense was a $250,000 payment to the California State Protocol Foundation, which funded Jerry Brown’s travel while he was governor.
In the name of charity
Though there are limits on how much lawmakers can accept in gifts, companies also seek to gain influence by making unlimited charitable donations on a lawmaker’s behalf. These donations are known as “behested payments,” and the industry made nearly $100,000 of them in 2017 and 2018.
Last year, a Coca-Cola distributor in Gonzalez’s district donated $10,000 to the San Diego Food Bank in her name — a contribution she said she was unaware of until contacted for this article.
Sometimes, lawmakers seek out contributions. When state Assemblyman Adam Gray (D-Merced) asked the beverage association to sponsor the annual meeting of the National Conference of State Legislatures, the association gave $25,000 in his name. Gray, who served as California’s representative to the meeting, said it was his responsibility to secure sponsors, and that he asked several corporations to contribute.
Those contributions, he said, don’t influence his vote. For example, he said Google gave $100,000 but he voted for privacy legislation the company opposed.
“If you want to support my agenda, my voting record and the things I stand for, I’m happy to take that support,” Gray said. “But it has zero role in how I represent my district or how I make decisions on public policy.”
Funding lawmakers’ campaigns
The most direct method that interest groups use to influence the political process is by giving money to campaigns, political parties and legislative caucuses.
Along with spending $8.9 million on the statewide ballot measure, the American Beverage Assn. PAC, PepsiCo and Coca-Cola gave about $1.1 million to other statewide and local political efforts in the last two years.
The majority of legislators received campaign cash from the beverage association, Coke or Pepsi — if not all three.
A spokesman for Coca-Cola said the company selects recipients based on committee assignments, caucus memberships, leadership positions and whether they represent regions with Coca-Cola facilities.
“There is no one-size-fits-all approach,” said company spokesman Max Davis. “At times, the individual views of candidates we support may vary from our own.”
Monning said the soft drink industry is a formidable adversary. Many colleagues tell him they can’t vote for legislation that would reduce sales because they have a distributor in their district.
In addition to a statewide soda tax, the bills under consideration this year would require warning labels about sugar and prevent soda companies from offering retailers incentives to sell their drinks. They also would ban retailers from selling supersize sodas and prohibit sales in checkout lanes.
As lawmakers consider these bills, Monning said, his question to his colleagues will be simple:
“Do you represent the soda industry?” he said. “Or do you represent those children in your district showing a steady increase in poor health?”
Samantha Young is a reporter with Kaiser Health News (KHN), which publishes California Healthline, an editorially independent service of the California Health Care Foundation. KHN is not affiliated with Kaiser Permanente.
California Healthline digital reporter Harriet Blair Rowan contributed to this report.
How California Healthline compiled data about soda companies’ political spending
Among the ways soda companies try to exert influence on the political process is by contributing money to campaigns hiring lobbyists and plying elected officials with drinks, meals and event tickets and making charitable contributions on the behalf of lawmakers.
Using the California secretary of state’s website, California Healthline downloaded the campaign contributions made by the American Beverage Assn. PAC, Coca-Cola Co., PepsiCo and Dr Pepper Snapple Group in 2017-18. This includes some non-monetary contributions.
To track lobbying, we created a spreadsheet of expenses reported on lobbying disclosure forms, also available on the secretary of state’s website, by the American Beverage Assn., Coca-Cola and Pepsi. We found details about how much the industry paid lobbying firms and which lawmakers, or members of their staff, accepted gifts.
To find how much these entities gave in charitable contributions, California Healthline pulled data described as “behested payments” from the California Fair Political Practices Commission website. These are payments special interests can make to a charity or organization on behalf of a lawmaker. Sometimes, a few of these payments also show up on lobbying forms. We compared the behested payments with the lobbying reports to ensure we did not double-count money.
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California bans local soda taxes
California cities and counties won’t be allowed to tax soda for the next 12 years after Gov. Jerry Brown signed fast-moving legislation Thursday.
The bill, which was first unveiled Saturday evening, prohibits local governments from imposing new taxes on soda until 2031. It comes after a deal was struck between legislators and business and labor interests who agreed to remove an initiative from the Nov. 6 statewide ballot that would have restricted cities and counties from raising any taxes without a supermajority vote of local citizens.
In a signing statement, Brown said soda taxes “combat the dangerous and ill effects of too much sugar in the diets of children.” But he added that mayors across the state called him to support the deal because they were alarmed by the tax initiative.
Brown also reacted strongly to another part of the initiative, which would have restricted the state’s ability to raise certain fees without a two-thirds vote of the Legislature.
“This would be an abomination,” Brown wrote.
Many lawmakers shared Brown’s mixed emotions toward the soda tax ban.
During debate on the legislation, Assembly Bill 1838, legislators said they reluctantly voted to impose the moratorium because the ballot measure, for which signatures were gathered by a political campaign financed by more than $7 million from the beverage industry, would have been worse for state and local government coffers.
Assemblyman Kevin McCarty (D-Sacramento) said he was against both the soda tax ban and how the beverage industry used the threat of an initiative to force the Legislature’s hand, but ultimately supported it.
“I think this is a terrible decision that we’re making,” McCarty said during a state Capitol hearing on the bill Thursday morning.
Sen. Scott Wiener (D-San Francisco) voted against the deal, but said he understood the choice his colleagues were making.
The beverage “industry is aiming basically a nuclear weapon at governing in California and saying if you don’t do what we want, we’re going to pull the trigger and you are not going to be able to fund basic government services,” Wiener said. “This is a pick-your-poison kind of situation, a Sophie’s choice. What the Legislature is doing is perfectly reasonable.”
Minutes after Brown signed the soda tax ban, proponents formally withdrew their initiative from the statewide ballot. The deadline to do so was Thursday.
The initiative wouldn’t have banned local soda or other tax increases. But it would have made them much harder to pass. It would have required all local tax hikes to pass by a two-thirds supermajority vote, making it significantly more difficult for cities and counties to raise revenue for a variety of projects.
Currently, any local sales, hotel-room or other tax increase needs a simple majority of local ballots that are cast — provided that the money goes to a city’s day-to-day operating budget. Roughly half of the local tax measures approved by voters since 2012 — raising hundreds of millions of dollars annually — did not receive supermajority approval, according to the state’s nonpartisan Legislative Analyst’s Office.
Public health advocates have been pushing for soda taxes across the United States for years, saying that higher prices would reduce consumption amid growing rates of obesity and diabetes while also generating more revenue for local governments. By contrast, the beverage industry has argued such taxes make it harder for low-income residents to buy groceries and unfairly single out soda as the cause of health problems.
Thirty cities and states attempted to pass soda taxes before Berkeley became the first to succeed in November 2014, charging a penny-per-ounce tax. Since then, three other Bay Area cities — San Francisco, Oakland and Albany — have passed soda taxes. The soda tax ban leaves those measures intact, but prohibits others that would have taken effect this year. Earlier this week, Santa Cruz city officials voted to put a 1.5-cent-per-ounce soda tax on the November ballot, an effort that will be blocked under the new state legislation.
Activists were stunned by the quick action on the soda tax ban. Carter Headrick, director of state and local obesity policy initiatives at the American Heart Assn., said using a ballot initiative to leverage lawmakers to prohibit soda taxes in communities across California was “blackmail.”
“I don’t think the [beverage industry] ought to be forcing legislators to be taking away the rights of people to vote,” Headrick said.
Some lawmakers attacked the deal because they supported the initiative. Sen. Jeff Stone (R-Temecula) said that Thursday’s decision subverted the will of Californians who wanted to keep their taxes low.
“This bill tells 1 million people that signed this petition to make it harder to raise their taxes that their voices don’t matter,” Stone said.
The American Beverage Assn., which represents soda companies and other nonalcoholic drink manufacturers, contributed 85% of the initial $8.3 million raised by backers of the ballot measure.
A spokesman for the association said that the legislation would keep grocery prices lower and that the industry was working to find alternatives to reduce sugar consumption.
“We believe the legislation approved today will allow us to work toward these goals,” association spokesman William M. Dermody Jr. said in a statement.
Labor interests added momentum to the eleventh-hour soda tax ban legislation, saying the initiative would be far more damaging to the state.
“A temporary pause on further local soda taxes gives California the opportunity to work on a statewide approach to the public health crisis of diabetes,” Alma Hernandez, executive director of SEIU California, said in a statement.
California: Organizations file lawsuit challenging constitutionality of soda tax preemption law
A lawsuit was filed by Cultiva La Salud, among other organizations, challenging the constitutionality of California's soda tax preemption law. They argued it violated: Article I, § 3 Article II, § 11 Article XI, §§ 3 and 5 and Article XIII, § 25.5 of the California Constitution. The chief executive officer of ChangeLab Solutions, an organization supporting Cultiva La Salud in the suit: "It is imperative that local governments have decision-making power and all tools at their disposal to protect the health and safety of their residents, especially during this time of COVID-19. Abusive laws like this one harm families and communities, and they should have no place in California or anywhere else."
The American Beverage Association said in response to the lawsuit: "We may disagree with some in the public health community on discriminatory taxes, but we agree that we must work on comprehensive solutions to public health challenges. Instead of going to the healthiest cities to propose a tax, we’re going to communities with the highest rates of obesity in the country and working hand-in-hand with community leaders and public health groups to cut sugar consumption.” Δ]
Oregon veto referendum introduced to overturn ban on cities and counties taxing food and beverages
On June 20, 2019, a veto referendum was introduced which would overturn Section 67 of Oregon House Bill 3427. The section in question prohibited cities, counties, and other local governments from imposing taxes on grocery sales. The bill was signed into law by Oregon Governor Kate Brown (D) on May 16, 2019. Supporters of the referendum had until September 28, 2019, to obtain 74,680 valid signatures in order to certify the referendum for the November 3, 2020, ballot. The necessary signatures were not turned in ahead of the September 28, 2019, deadline. Ε]
Arizona governor signs bill preempting cities and counties from taxing soda
On March 16, 2018, Gov. Doug Ducey (R) signed HB 2484, which preempted cities and counties from taxing soda. It required cities and counties to tax all food equally. HB 2484 passed unanimously in the Arizona State Senate and by a 47-13 vote in the Arizona House of Representatives. At the time of the bill's passage, no municipalities in Arizona had enacted soda taxes. Ζ]
California: Legislature approves ban on soda taxes in cities and counties
On June 28, 2018, Gov. Jerry Brown (D) signed AB 1838, prohibiting cities and counties from implementing a tax on soda and sugar-sweetened drinks through 2030. The legislation was retroactive to 2018, voiding any soda taxes that went into effect or were set to go into effect that year. It preempted fees on sugar-sweetened drinks in at least four towns and cities in the state, including Berkeley, San Francisco, Oakland, and Albany.
The legislation resulted from a deal between beverage industry representatives and legislators to prevent a ballot measure from being presented to voters in November 2018. The measure would have prohibited local communities from raising taxes without the approval of two-thirds of voters or elected officials.
The beverage industry spent at least $7 million in support of the ballot measure. State senators said industry representatives approached legislators with a deal: approve legislation prohibiting soda taxes and, in exchange, the industry would no longer pursue the ballot measure. Β]
Legislators who voted for the bill expressed discomfort with the decision. Senate President Pro Tem Toni Atkins (D) asked her colleagues to support the bill.
Sen. Scott Wiener (D), who voted against the legislation, said it would hurt local governments and criticized the beverage industry for what he said was forcing the legislature to approve the bill. William Dermody, vice president of the American Beverage Association, disagreed, saying the legislation protected local businesses and consumers from higher taxes. Η] Β] ⎖]
Pennsylvania Supreme Court upholds Philadelphia soda tax
On July 18, 2018, the Pennsylvania Supreme Court upheld a tax on soda in a 4-2 decision that found that Philadelphia's tax did not violate state law. The Supreme Court's decision upheld a ruling by the Pennsylvania Commonwealth Court issued in June 2017. Supreme Court Chief Justice Thomas Saylor wrote in the majority opinion, "The legal incidences of the Philadelphia tax and the commonwealth’s sales and use tax are different and, accordingly, Sterling Act preemption does not apply." Arguments before the court focused on a 1932 state law called the Sterling Act, which allows cities to implement taxes on items that are not already taxed by the state. Opponents of the tax argued that the city violated the law because the soda tax would be passed on to consumers, who already pay the state sales tax. The city argued that the tax was on soda distribution, not sales. ⎗] ⎘]
The Philadelphia City Council approved the soda tax by a 13-4 vote on June 16, 2016. The tax, amounting to 1.5 cents per ounce, went into effect on January 1, 2017. Philadelphia became the first city among the nation's 100 largest cities by population to approve a soda tax after months of lobbying by supporters and opponents. ⎙] Click here for more information.
California goes tax wild, eyes levies on everything from water to tires
Party officials survey the damage after a tough midterm election which left Republicans holding just seven of California's 53 House seats chief correspondent Jonathan Hunt reports.
With the tax-filing deadline just days away, California residents are worried that a slew of proposed levies on everything from soft drinks to water to tires and car batteries could soon see even more money going out of their pockets in the state that already has the nation's highest income tax.
As Californians grapple with that 13.3 percent income tax – and some leaner-than-usual refunds this year due to the recent federal tax overhaul – lawmakers in Sacramento are looking at a range of other revenue sources. Members of the legislature's Democratic supermajority argue that these new taxes are vital to shore up the state coffers and to provide crucial services such as repairing crumbling infrastructure, cleaning up toxic wells and fighting obesity.
Overall, the California Tax Foundation has added up more than $6.2 billion worth of tax increase proposals pending in the state legislature, with that number expected to rise as bills are amended.
But the state’s minority Republican leaders bemoan these new proposals, arguing that Californians are already burdened by some of the highest taxes in the country and the new charges would only worsen the state’s mounting affordability and housing challenges.
“We have the highest gas tax in the nation and the majority party has gone as far as taxing our air,” California State Senate Republican Leader Shannon Grove said in a statement to Fox News. “Now, they are proposing to tax our water, soda, tires, and more. Higher taxes won’t solve California’s affordability and housing problems, and they will only make things worse.”
A spokesperson for the California Democratic Party declined to comment to Fox News, instead directing questions to lawmakers who proposed the pieces of legislation.
One of the most controversial proposals to come out of Sacramento this year is a proposal from Democratic Gov. Gavin Newsom to tax drinking water in order to clean up contaminated water in the state’s low-income and rural areas.
The proposal, which if enacted would levy a fee of between 95 cents and $10 a month on residents' water bills depending on meter readings, has divided members of Newsom’s own party. Tax and fee increases require support from two-thirds of lawmakers and, despite Democrats holding roughly 75 percent of the legislative seats in the state, some representatives from moderate and agricultural strongholds balk at the water tax idea.
State Sen. Anna Caballero has proposed using the state’s $22 billion surplus to create a trust fund to pay for water improvements. The move by Caballero has been championed by taxpayer associations in the state.
“A state-imposed tax would not only be an outlier from a national perspective, it would be for California as well,” John Coupal, the president of the Howard Jarvis Taxpayers Association (HJTA), said in a statement. “Moreover, there are other ways to fund the one-time $150 million cost of necessary water system improvements.
Coupal added: “Not only is there federal funding specifically available for this purpose, California has passed several statewide bonds that have allocated hundreds of millions of dollars for clean water infrastructure improvements.”
Along with water, another liquid has come under the scrutiny of lawmakers in California: soda.
Following a national trend – and concerns over the risks of obesity and diabetes – Democratic lawmakers in the state have proposed a tax on the sugary beverages, which include soft drinks, sweetened iced teas, coffees and sports drinks. While details have remained vague on how much these taxes would be, Democratic Assemblyman Richard Bloom has supported a 2-cent-per-ounce tax in previous proposals.
“We have ignored this crisis for too long,” Bloom said in January. “We are standing on the edge of a cliff and addressing this health crisis requires a multi-pronged approach like the one you see today.”
A recent Los Angeles Times report highlighting some of these tax proposals noted that polls show residents already think they're overtaxed. Republicans and representatives of the beverage industry argue that the tax would unfairly hurt businesses and consumers, particularly those in lower-income communities.
The “burden of paying the tax would disproportionately fall on some groups relative to others,” said Steven Maviglio, a spokesman for the American Beverage Association.
Besides beverages, Democrats are looking to pass Assembly Bill 18, which among other things looks to tax the sale of handguns and semiautomatic weapons in order to generate funding for gun control programs.
The bill, which was sponsored by Democratic Assemblyman Marc Levine, would implement “an excise tax on the sales of handguns and semiautomatic rifles” and then hand over the resulting revenue to the California Violence Intervention and Prevention Grant Program (CalVIP).
“California needs to bolster violence prevention initiatives so that they are commensurate with our state’s tough gun laws and as effective as violence prevention programs of other states,” Levine said in a statement earlier this month.
California already has some of the toughest gun control laws in the country and, beginning in 2019, state ammunition dealers will be required to maintain logs of all sales – including those of bullets. The state has already restricted online sales of bullets so they can only be delivered to licensed dealers and not someone’s home.
The gun-tax legislation has drawn heavy criticism from gun-rights and hunting groups.
In an effort to curb opioid addiction and fund drug treatment programs, lawmakers in California have introduced a bill that would impose a one-cent-per-milligram surcharge on prescription opioids sold in the state.
“California’s opioid epidemic has cost state taxpayers millions and the lives of too many of our sons and daughters,” Democratic Assemblyman Kevin McCarty said in a statement. “We must do more to help these individuals find hope and sobriety. This plan will provide counties with critical resources needed to curb the deadly cycle of opioid and heroin addiction in California.”
In the state with the most drivers in the U.S., lawmakers are also looking to tax parts of automobiles to fund other government programs and initiatives.
In February, Democratic Assemblyman Chris Holden proposed a $1.75 fee on every new tire put on a car, while in December another bill was proposed to levy a $1 fee on every lead-acid battery made by a manufacturer and sold in the state until 2022. The tire tax is estimated to generate $57 million to pay for stormwater cleanup.
There is also a proposal to tax oil and gas extraction in the state, which would not only put California in line with every other major oil-producing state in the U.S., but would bring in an estimated $1.5 billion a year.
While lawmakers supporting these moves say they will improve the lives of all Californians and help the state maintain its large surplus, critics say all they do is allow the state to spend more money at the expense of working residents.
“As they spend more and more money, we raise the cost of living on everyone in the state,” Will Swaim, the president of the California Policy Center, told Fox News.