California Lawmakers Capitulate to Industry, Ban Sugary Drink Tax

Batya Swift Yasgur, MA, LSW

July 06, 2018

California lawmakers last week approved a bill that would ban local communities from enacting taxes on groceries, including sugary beverages, for the next 12 years. Governor Jerry Brown signed the bill into law June 28.

Assembly Bill 1838 bans new local taxes on sugary sodas and similar beverages until 2031, although jurisdictions that already have these taxes in place will be permitted to retain them.

California has passed more soda taxes than any other state so far as a means to fight obesity, diabetes, cardiovascular disease, and tooth decay, as well as a way of raising revenue for school and public services.

The deal was met with fierce opposition by many medical societies, including the American Heart Association (AHA), the American Diabetes Association (ADA), and the American Cancer Society, and by the California Dental Association.

In a statement to | Medscape Cardiology, the ADA said that the organization has "opposed the California legislation that barred local communities from adopting new taxes on sugary beverages for the next 12 years and was disappointed by its passage."

It noted that state and local legislation to tax sugary beverages was designed to "deter consumption of such beverages" and emphasized that California "cannot afford to wait to address the growing diabetes epidemic."

How the Bill Came to Pass

The "Keep Groceries Affordable Act of 2018" (Bill 1838) was a last-minute agreement that overturned a state ballot measure, slated for a November vote. The ballot, instigated by the beverage industry, proposed that local jurisdictions seeking to raise taxes would require a two-thirds vote instead of the 50% threshold currently in place — a move Governor Brown called "an abomination."

According to campaign finance data from the office of California Secretary of State, Alex Padilla, the beverage companies spent millions of dollars to gather enough signatures to introduce this local tax ballot measure.

Senator Scott Wiener (D-San Francisco), who opposed Bill 1838, told | Medscape Cardiology that the proposed state ballot measure would have made it extremely difficult for local jurisdictions to raise any taxes — even those not related to beverages.

"The beverage industry was threatening a ballot measure to severely undermine the ability of local governments to raise revenues to fund schools, police, fire, and other basic services," he said.

He added that the legislature "was placed in a terrible lose-lose position by the soda industry and was forced to choose the lesser of evils."

Wiener noted that he has "long been a proponent of soda taxes as an effective public policy strategy to address the explosion of type 2 diabetes and other metabolic diseases that are harming our communities and our kids, in particular our lower-income community of color."

But although he personally "could not in good conscience vote to ban local soda taxes," he was "not critical of [his] colleagues for choosing what, in their view, was the lesser of evils."

The "only bad actor here is the soda industry, which was willing to inflict grave harm on the people of California to protect its bottom line," Wiener declared.

Speaking to | Medscape Cardiology, David Lee, MD, president of the Western States Affiliate of the AHA, said, "What happened was obviously a political ploy, admitted by the soda industry, that engineered the whole thing."

Do Beverage Taxes Work?

William M. Dermody Jr, vice president, media and public affairs, American Beverage Association, told | Medscape Cardiology that the bill was designed to protect store owners whose businesses might suffer from increased taxes and also to help working families by preventing increases in their grocery bills.

The beverage companies are "all for a strong, healthy America, but we feel taxes of this nature don't get us there," he emphasized.

"When these taxes have been tried, they really haven't done anything to reduce obesity or obesity-related conditions like diabetes, and are not an effective solution."

Instead, he continued, "we feel the best way to help people reduce sugar in their diet is for government, public health groups, and industry to work together to help folks and empower them to change their behaviors and reduce their sugar consumption, including from beverages."

Dermody noted that the beverage companies are "using their expertise in marketing, innovation, and distribution to get people to try more beverages that have zero sugar or less sugar" by engaging in educational activities within communities and also providing additional information about calories in drinks through the "Calories Count" and "BalanceUS" programs.

Lee disagrees that taxes are ineffective in reducing sugar consumption. "Data support the measurable benefits for this tax, which far outweigh the cost," he said.

Moreover, according to the AHA's statement, "the beverage industry spent $866 million in 2013 alone to market sugary drinks as fun and healthful and is pushing legislation in states across the country to prevent communities from taking responsible action."

What Next?

"Although the senate passed the bill and the governor signed it last week, the ballot initiative process in California does allow the overriding of some of the measures restricting local taxes, if enough signatures are collected," said Lee.

"The AHA, the California Medical Association, and the California Dental Association are targeting the 2020 ballot in proposing a statewide sugary drink tax," he stated.

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