Big Soda scored a major victory on June 28 as California lawmakers voted in favor of a budget bill that included language pre-empting sugar taxes in a key U.S. market, where a handful of municipalities have approved such levies.
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The legislative add-on prevents any local government from imposing future taxes on groceries including carbonated and noncarbonated nonalcoholic beverages through 2030. That would benefit soda makers in a state where so-called soda taxes gained traction in the San Francisco area in 2014 and 2016.
The measure is seen as a way of avoiding an even broader ballot initiative, supported by the soda industry, that would raise the bar for any locality to raise taxes. State lawmakers are trying to get that initiative off the ballot by the deadline, making them willing to swallow the anti-tax measure as an alternative.
“The soda industry has deep pockets and used them to push the legislature into a no-win situation,” California state Senator Bill Monning said before the vote. The Democrat, who has supported soda taxes as a way to combat chronic health problems such as obesity and diabetes, voted against the bill.
If the measure remains on the ballot, Californians in November could vote to require that any locality’s taxes have a two-thirds vote, rather than simple majority of voters or elected bodies.
The Democratic-controlled state Senate and Assembly voted in favor of the legislation on June 28, passing it to the governor for signing. The Sacramento Bee reported this week that Governor Jerry Brown had dinner this month with officials from the American Beverage Association, PepsiCo Inc. and Coca-Cola Co.
“This proposal was not discussed at the dinner,” said Lauren Kane, a spokeswoman for the American Beverage Association (ABA). She did not respond to a query on what was discussed, and said the group was committed to working with government and public health officials to help reduce sugar consumption.
The ABA says the legislation will protect consumers from potential taxes.
The move is part of a worrying national trend, said Eric Crosbie, a post-doctoral scholar at the University of California San Francisco, who is researching such measures. Arizona and Michigan have already enacted similar legislation.
“The beverage industry and their lobbying arm are doing this very similarly to what we saw in the pre-emption of tobacco control,” he said. “Once it’s in the legislation, it’s difficult to reverse.”