Will California Prohibit Taxes on Soda?

Bills at the state level could ban localities from enacting their own tax on soft drinks.

June 29, 2018

SACRAMENTO, Calif. – A bill before the California Assembly would make it illegal for cities or counties to pass separate taxes on sweetened beverages for a dozen years—a move some see as part of a new strategy by the beverage industry to clamp down on taxing soda, the New York Times reports.

California localities have led the way, with Berkeley approving the first U.S. tax on sugar-sweetened beverages in 2014. Since then, three more California cities, plus three additional municipalities, have put into place similar ordinances.

“People across the country are taxed enough, and they can’t afford new taxes on what they eat and drink,” said William Dermody, the vice president for media and public affairs at the American Beverage Association.

The beverage industry’s approach had been to address the proposals as they popped up, but now the industry is going straight to the top and backing legislation at the state level that would prohibit patchwork laws from taking effect. Already, Michigan and Arizona have approved laws that ban localities from taxing soda. Oregon voters will decide on a ballot proposal prohibiting taxes on groceries. Other states with similar measures include Washington, Pennsylvania and New Mexico.

In California, the industry helped to gather signatures for a ballot initiative that would require cities and counties to get approval from two-thirds of voters or an elected body to raise taxes—higher than the current simple majority. According to several lawmakers, the beverage industry indicated it would withdraw the November proposal if the bill forbidding soda taxes passed at the state level. As of press time, it appeared that the proposal—which would not remove taxes enacted prior to 2018—would pass.