Jul 10, 2018

California Puts a 12-Year Ban on Soda Taxes

Perhaps you heard about the soda taxes that California began putting in place back in 2014. The first of their kind in the nation, these taxes made national headlines and caused a major stir with proponents and opponents alike.

Well, this summer things changed drastically in the Golden State when Governor Jerry Brown signed a ban on such soda taxes. The tax ban may have been a shock to many observers, but the battle was brewing for years. Beverage companies had long argued that statewide bans are unfair because they hurt businesses, jobs, and consumers. The companies’ lobbyists spread this message with vigor, spending millions of dollars in the process.

“Our aim is to help working families by preventing unfair increases to their grocery bills,” said William Dermody, the American Beverage Association’s vice president of policy, in a statement. “At the same time, we’re working with the public health community and government officials to help Californians reduce sugar consumption in ways that don’t cost jobs or hurt the small businesses that are so important to local communities.”

The American Beverage Association’s concerns have some validity, as stores in cities with soda taxes have seen steep declines in soda sales. And for the low-income shoppers who disproportionately purchase such drinks, the increased price due to the tax is felt more poignantly.

On the flipside, public-health advocates point out that the soda tax ban overrides the will (and perhaps health) of the state’s voters. After all, cities like Berkeley passed soda taxes due to concerns that soda is one of the main sources for calories and added sugars in the American diet.

They also say the aggressive anti-tax tactics employed by beverage companies were similar to those used by tobacco companies to attack legislation on such things as cigarette taxes and public smoking bans. Essentially, the ABA backed a ballot measure that would’ve made any kind of local tax or fee increase require supermajority votes. Because supermajority votes are harder to come by than the standard simple majority, new legislation would’ve been extremely difficult to pass.

After the statewide soda tax ban was signed by Governor Brown, the American Beverage Association and its allies pulled the “supermajority” referendum from the ballot as a sort of compromise. Carter Headrick, a director at the American Heart Association, saw it in a more sinister light, referring to it as “blackmail.”

While some small businesses in California may be celebrating the lack of new taxes on soda and other unhealthy products, health advocates worry that the repercussions from this ban will be felt widely.

“There’s a fear that as California goes, so goes the nation,” Sabrina Adler, a public health attorney, told The Washington Post. “This could be the beginning of further preemption in other states.”

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About the author

Grant Olsen
Grant Olsen is a writer specializing in small business loans, leadership skills, and growth strategies. He is a contributing writer for KSL 5 TV, where his articles have generated more than 6 million page views, and has been featured on FitSmallBusiness.com and ModernHealthcare.com. Grant is also the author of the book "Rhino Trouble." He has a B.A. in English from Brigham Young University.

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