For Your Health

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The powers that be, sad, hope it fails.

California Banning Soda Taxes? A New Industry Strategy Is Stunning Some Lawmakers

https://www.nytimes.com/2018/06/27/upshot/california-banning-soda-taxes-a-new-industry-strategy-is-stunning-some-lawmakers.html


For years, the soda industry had an ironclad strategy when a city wanted to enact a soda tax: Spend a lot of money, rally local businesses, and shoot it down.

That strategy worked again and again, until it didn’t. In 2014, Berkeley, Calif., passed the nation’s first tax on sugary drinks, which have been linked to heart disease, obesity and tooth decay. Two years later, six communities, including three more cities in California, enacted similar bills.

Now the beverage industry has a new approach. Instead of fighting the ordinances city by city, it is turning to states, trying to pass laws preventing any local governments from taxing their products.

In California, a bill seems set to pass this week that would pre-empt any new local beverage or food taxes for 12 years. Arizona and Michigan have already passed similar laws. In Oregon, the state’s grocers, in an effort the beverage industry supports, have collected enough signatures to bring a ballot initiative barring any taxes on grocery items. And legislators are considering pre-emption bills in other states, including Pennsylvania, New Mexico and Washington.

“It’s a little bit like, instead of playing a game of whack-a-mole, you could just put a sheet of plywood over all the holes,” said Franco Ripple, a spokesman for the Campaign to Defend Local Solutions, a group that was founded last year to oppose state laws that limit local autonomy.

The beverage industry says the statewide measures are an appropriate way to protect local businesses and consumers from higher taxes. “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, an industry trade group.

In California, the bill to pre-empt soda taxes, which was championed by the soda industry and introduced over the weekend, came as a shock to public health advocates and many state lawmakers. The state has passed more soda taxes than any other, shepherded by progressive lawmakers who see them as a source of revenue for schools and public services and a tool to fight obesity and diabetes. Scott Wiener, a state senator who represents San Francisco and parts of San Mateo County, said the beverage industry was holding California “hostage.”

Beverage companies spent at least $7 million to get an initiative on the ballot this November that would prevent local communities from raising taxes without approval from two-thirds of voters or an elected body, rather than a simple majority. Such a change could make it much more difficult for localities to pay for police, fire, transit and other public services.

According to several state senators, the industry then went to lawmakers in Sacramento with a proposal: Pass a bill banning soda and food taxes, and the industry would drop its November ballot initiative.

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“They sent us a ransom note that they will drop this horrible ballot measure if we put a 12-year moratorium on local soda taxes,” said Mr. Wiener, who has long supported soda taxes and opposes the bill that would bar them. “It’s a classic case of picking your poison. The soda industry has gone completely rogue.”

Several top lawmakers said they opposed the measure banning soft drink taxes, known as Senate Bill 872. But they said the measure was likely to pass and could be signed into law this week because state lawmakers are so worried about the ballot initiative.

Nancy Skinner, a state senator who represents Richmond, Calif., as well as three cities that passed soda taxes in 2016, opposes the measure but recognized that her colleagues who planned to support it were in a bind. “The legislature is in an untenable situation where revenues for every jurisdiction are at risk,” she said.

The pre-emption bill would not overturn soda taxes enacted before 2018, but it would prevent any new ones, including a soda tax on the ballot this November in Richmond.

Gov. Jerry Brown has not taken a position on the beverage industry’s tax pre-emption bill, his spokesman said. But critics of the bill pointed to a photo that shows him posing with executives from Coca-Cola, PepsiCo and the American Beverage Association at a recent private dinner at the governor’s mansion. The governor’s spokesman said the meeting was unrelated to the soda measures.

The push for a pre-emption law began to materialize this year when an industry-financed group, the California Business Roundtable, started collecting signatures for the ballot initiative making local tax increases harder. The American Beverage Association California PAC contributed heavily to the effort, raising $6 million from Coke and Pepsi, $1 million from Dr Pepper Snapple and $100,000 from Red Bull.

The emerging deal, reported by The Sacramento Bee on Sunday, which called it “a shakedown,” provoked a fierce outcry across the state and the country. The American Heart Association, the American Diabetes Association, the American Cancer Society and more than 20 other groups issued a joint statement on Tuesday calling on Mr. Brown to oppose it and chiding the soda industry for “resorting to backroom deals and underhanded efforts to preserve its profits.”

Robert Lapsley, the president of the roundtable, said the group supports the legislation, which it views as a compromise. But if the bill doesn’t pass Thursday, it will move forward with its broader ballot initiative. “If they want to pass it, great,” he said. “If they don’t, we qualify tomorrow, and we kick off the next day on the campaign.”

The beverage association, which supports the California legislation, said its turn to pre-emption simply reflected its view that taxes on drinks represented an unfair burden — not just on them, but on retailers, bottlers, shipping companies and consumers.

Mr. Dermody noted that, in several states, the pre-emption bills are backed by a coalition of business interests, including grocery stores, and, in some cases, labor unions.

The California measure is part of a broader national strategy by the beverage industry to head off local soda taxes, which have passed in eight communities. Berkeley’s passage of a major soda tax paved the way for other cities to act. Philadelphia, San Francisco, Oakland, Calif., and the county that includes Chicago imposed their own such measures in 2016, followed by Seattle in 2017. The soda industry spent at least $38 million fighting the taxes in 2016, which were backed by public health advocates and the billionaires Laura and John Arnold and Michael R. Bloomberg, former mayor of New York, who contributed $20 million to the Bay Area soda tax campaign.

The experience of the places that adopted soda taxes has been mixed. Research in Berkeley, Philadelphia and Mexico, which has a similar tax, shows that the measures appear to increase beverage prices and reduce sugary drink sales.

But there has been backlash. Cook County in Illinois repealed its tax in the face of voter complaints and industry pressure. And Mayor Jim Kenney of Philadelphia has had to back away from his initial claims that beverage tax revenue would provide enough money to pay for a universal prekindergarten program for the city, as revenue has come in below projections. Definitive evidence about public health effects of the bills is still a long way off.

The beverage companies have borrowed a tactic from the tobacco industry, which used state pre-emption laws in the 1980s to ban cigarette taxes and other municipal antismoking ordinances. Republican-controlled state legislatures have also increasingly used state pre-emption laws to prevent cities and towns from adopting a wide range of local measures, including anti-discrimination laws, bans on natural gas fracking, higher minimum wages, and restrictions on the use of plastic bags.

“The irony is that the soda companies screamed very loudly about government overreach when soda taxes began to get passed,” said Kelly Brownell, the dean of the Sanford School of Public Policy at Duke University. “But now they are looking for the ultimate government overreach when it works in their favor.”