The beverage industry scored a defining victory in its battle against soda taxes this week as California lawmakers voted to bar future local taxes on sugary drinks.
The state had been a hotbed for the soda-tax movement, having passed laws designed to slash soda drinking in four jurisdictions. But under the fast-moving ban introduced June 23 and signed into law five days later, no new food or beverage taxes can be passed in the state until 2031 at the earliest.
The law represents a significant, if long-anticipated, shift among the nation’s soda makers, who have previously fought taxes, city by city, and expended millions of dollars in the process. Soda companies say the statewide bans more efficiently protect jobs and businesses that could be hurt by local tax laws.
But public-health advocates argue the state preemptions undermine the will and health of voters, pointing out that similar tactics have been embraced by tobacco companies and fast-food chains to fend off everything from cigarette taxes to menu labels.
Now backers of the soda tax movement are searching for other options in California — and bracing for similar fights across the country.
“There’s a fear that as California goes, so goes the nation,” said Sabrina Adler, a senior staff attorney at ChangeLab Solutions, which develops public-health policies. “This could be the beginning of further preemption in other states.”
Advocates say the tactical shift from soda makers was not unexpected, but the speed of the California ban caught many by surprise. California has long been seen as the vanguard of the soda-tax movement, which seeks to slash consumption of sugary drinks while raising revenue for local governments.
Soda is one of the primary sources of calories and added sugars in the American diet, and cities that have passed taxes — such as Berkeley, Calif., which became the first in 2014 — have seen consumption fall. According to the American Heart Association, eight cities now have soda taxes on the books, four of them in California, and a number of other cities in the state were readying ballot measures.
But while California’s existing taxes will remain in place under this week’s ban, others in the pipeline can no longer proceed. That will protect consumers and retailers from unexpected price hikes, argues the American Beverage Association, the trade group for soda companies.
Stores in other cities that passed soda taxes have faced sharp sales declines, risking jobs, the ABA has said. The group has also argued that soda taxes disproportionately affect low-income shoppers, who spend a larger portion of their income on food and beverages.
“Our aim is to help working families by preventing unfair increases to their grocery bills,” said William Dermody, the ABA’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.”
But such choices should be left to local communities, argues Carter Headrick, the director of state and local obesity policy at the American Heart Association, which fought the ban. Cities and towns are in the best position to judge whether a tax will improve health and raise revenue in their jurisdiction, he said, and the experience of most cities has been positive. Only two states, Michigan and Arizona, have previously passed this sort of preemptive ban, and in neither state were any cities actively pursuing taxes.
Critics have also taken issue with the way the ban was introduced. After lobbying hard for another, far more sweeping tax measure, the ABA and other business groups agreed to the soda tax ban as part of a last-minute deal with state lawmakers and unions.
Many lawmakers — including Assembly Speaker Anthony Rendon (D) — described the ban as a means of killing that ballot initiative, which would have made it far more difficult for cities and counties to pass taxes on anything, let alone soda.
“We’re disappointed with the vote, and we’re disappointed with the governor signing the bill,” Headrick said. “But we’re especially disappointed that ABA resorted to putting up a blackmail ballot measure and using it to force a preemption law through the legislature.”
Some advocates see a silver lining in this escalation, however. Jilted California cities may now be more open to other anti-soda measures, such as warning labels and children's meal restrictions, Adler said. There is also hope that lawmakers, many of whom have said in statements that they felt forced to approve the ban, will now support a statewide soda tax — which is not prohibited by this legislation.
And outside of California, advocates will continue pushing hard for city and county soda taxes, said Margo Wootan, the vice president for nutrition at the Center for Science in the Public Interest. Public health advocates are no strangers to preemption laws like California’s, Wootan added, or to similar bans now pending in Pennsylvania, Oregon and Washington.
The strategy is closely associated with tobacco companies, who used it to stall cigarette taxes and bans on smoking in public spaces. More recently, Wootan has clashed with restaurant groups who sought to ban menu labeling at the state level.
Today, she points out, such bans are moot: In early May, the Food and Drug Administration began requiring all chain restaurants to post calorie counts, after years of pressure from health groups.
“We are used to working on these issues for decades,” Wootan said. “The industry’s hope is that this becomes a significant roadblock to the soda-tax movement. But this is a temporary win for them.”