Soda tax

Cities and counties have long played a valuable role as laboratories of democracy for important public policy innovations, including public health policies. As cities and counties across the county introduce taxes on sodas and sweetened beverages to counter the rise in obesity, diabetes, heart disease, and other serious public health challenges, they are facing sophisticated opposition campaigns spearheaded by the deep-pocketed American Beverage Association (ABA) and allied groups.

In numerous localities, the ABA partners with U.S. Chamber of Commerce affiliates like the Chicagoland Chamber of Commerce and local chambers like the Seattle Metropolitan Chamber of Commerce. Statewide retail and grocery groups like Illinois Retail Merchants Association and PA Food Merchants Association have also been active. In Michigan in 2017, farm groups and the National Federation of Independent Business (NFIB) took a leading role on a state level bill to prevent soda tax initiatives. In Arizona in 2018, a host of business groups including the Arizona Beverage Association, Arizona Retailers Association, Arizona Restaurant Association, Arizona Food Marketing Alliance, and more worked to pass another state level bill to prevent local soda tax campaigns. See below for more.

Broad Anti-Grocery Tax Measures on the Ballot in Washington and Oregon, 2018

Seattle's soda tax took effect in January 2018. Since then, more kids and adults are drinking water, and it brought in more than $10 million in revenue for use on educational and health programs in its first six months. But in February 2018, a committee with the name "Yes! To Affordable Groceries" was launched to make sure the public health measure would not be adopted by any other local governments in Washington. Initiative 1634 was a deceptively simple anti-grocery tax measure that has been run through the corporate spin machine; it opened with the line, "Whereas access to food is a basic human need of every Washingtonian." The soda industry raised over $20 million for the effort, with little organized opposition on the other side. Initiative 1634 was passed November 6, 2018 by a margin of 56 percent to 44 percent.

As of November 30, 2018, "Yes! To Affordable Groceries" had raised $22,114,513.97 and spent $20,204,044.02.

The top donors to "Yes! To Affordable Groceries" were:

• The Coca-Cola Company: $10,562,245.13
• Pepsico, Inc.: $7,963,710.08
• Keurig Dr. Pepper (Fka Dr Pepper Snapple Group, Inc.): $2,393,488.00
• Dr. Pepper Snapple Group, Inc.: $911,021.38
• Red Bull North America: $59,535.41

Heavy-handed industry tactics were also on display in Oregon in 2018, where grocers and the ABA raised at least $6.5 million on an overly broad constitutional amendment that would not just have impacted soda taxes but could be read as prohibiting taxes at all stages in the chain of commerce, permanently preventing the state and its cities and counties from levying any taxes related to distribution or sale of groceries. Under the name "Yes! Keep Our Groceries Tax Free!," the ABA kicked in two enormous cash contributions of $500,000 each towards the end of the campaign. The Oregon bill failed on November 6, 2018.

The top donors to "Yes! Keep Our Groceries Tax Free!" were:

• Wilson Grand Communications: $3,980,604.05
• The American Beverage Association: $3,295,345.71
• Albertsons Safeway: $985,917
• Kroger: $970,917
• Morning in America: $751,243.16

Opponents of the measures on the ballot in Washington were unable to muster the kind of big money wielded by the soda industry. But health groups like the American Heart Association in Oregon have had some success in educating the media and voters.

One headline in the Seattle Times summarized what was on the line for local democracy campaigns: "Vote for this initiative and you may as well bow down to your corporate overlords."

Supermajority Strategies and High-Stakes "Hostage Taking" in California

Early in 2018, California had the most soda tax measures under consideration of any state. Cathedral City, Palo Alto, Santa Cruz, and Richmond all seemed poised to join Berkeley, San Francisco, Oakland, and Albany as cities with soda taxes on the books.

That changed in April when the ABA spent millions on a campaign to get an explosively controversial measure on the November ballot that would have required a two-thirds supermajority vote by either voters or an elected body before any tax hike at the local level could be implemented. The move prompted an outcry by mayors across the state and was characterized as an “abomination” by Governor Jerry Brown.

After meeting with the soda industry, the governor cut a deal that resulted in legislators in Sacramento passing a preemption bill to ban local soda taxes until 2030 in exchange for taking the measure off the ballot. The whole incident was called a “shakedown,” “extortion,” and “high-stakes hostage taking” by the media.

Sen. Scott Wiener (D-San Francisco) said, "Industry is aiming basically a nuclear weapon at governing in California and saying if you don't do what we want, we're going to pull the trigger and you are not going to be able to fund basic government services."

This supermajority tactic, popularized by the American Legislative Exchange Council (ALEC), which has peddled a "Super-Majority Act" for decades, is now spreading. Following last year's repeal of a short-lived soda tax in Cook County, Illinois, a group of county commissioners introduced legislation last month that would require a two-thirds supermajority vote by commissioners to enact any new taxes.

Public health groups campaigning for soda taxes did score one big win this year, when the Supreme Court of Pennsylvania upheld the City of Philadelphia's 2017 soda tax after an industry challenge.

Consumers can anticipate more deep-pocket PR campaigns and tactics in 2019 to bully localities into abandoning the soda tax idea.

Cities with Soda Taxes

Many U.S. localities have implemented a soda tax to reduce obesity and related public health problems. In each locality, the ABA has bankrolled a big dollar PR campaign against the tax.

• Berkeley, California.
• Philadelphia, Pennsylvania.
• San Francisco, California.
• Oakland, California.
• Albany, California.
• Boulder, Colorado.
• Santa Fe, New Mexico, tax defeated 2017.
• Cook County, Illinois, repealed in 2017.
• Seattle, Washington.

States with Soda Taxes

West Virginia (1951), Arkansas, Virginia, Tennessee

ABA Spearheads Opposition to Local Soda Taxes

Learn more about the American Beverage Association on its Sourcewatch profile page. The American Beverage Association (ABA) is a 501(c)(6) trade association and a lobbying powerhouse bankrolled by the largest players in the soft drink industry including Coca-Cola and Pepsi-Cola. (ABA’s full membership directory can be viewed here.) The D.C.-based ABA is led by Susan K. Neely, President and Chief Executive Officer.

Led by the ABA, the soda industry spent $48.9 million on recent soda tax opposition campaigns in Cook County, IL; Philadelphia, PA; Boulder, CO; San Francisco, CA; Oakland, CA; Seattle, WA, Santa Fe, NM; and Albany, California, according to a November 2017 report by the watchdog group Center for Science in the Public Interest.

The ABA itself maintains a strong internet presence with a website, Twitter account, Facebook account, and YouTube account. In addition, the organization creates and maintains a large number of “campaign websites” with linked social media accounts.

Below is a list of the some of the more recent ABA campaign websites.

• No on V, Enough is Enough: Don’t Tax Our Groceries (San Francisco)
• Ax the Bev Tax (Philadelphia)
• No on HH: No Grocery Tax (Oakland)
• Can the Tax Coalition (Cook County)
• Better Way for Santa Fe & Pre-K
• Keep Seattle Livable for All
• No on 2H: Stop the Beverage and Grocery Tax (Boulder)

Tactics in the ABA Playbook

Because most of the soda taxes that have been implemented were enacted by ballot initiative, the ABA has spent most of this money on television advertising campaigns. When the fight shifts to a state measure to preempt these local ordinances, it is likely that the ABA will inflate campaign and lobby spending as well in an attempt to influence state lawmakers.

In each locality that introduces a soda tax, the ABA quickly sets up a “grassroots” public relations front group whose primary purpose is to shields brand-name soda companies, like Coke and Pepsi, from responsibility and culpability. The Center for Media and Democracy calls the practice of a big dollar PR industry campaigns acting like an organic grassroots operation “astroturfing.”

In Richmond in 2012 for instance, the ABA front group fighting a soda tax referendum on the ballot was called “Community Coalition Against Beverage Taxes.” In El Monte in 2012 the ABA front group was called “El Monte Citizens Against Beverage Taxes.” The overall PR campaign is also given a name, and TV ads, campaign websites, and social media accounts are created and commonly themed. Because residents only see the front group name or campaign name such as “Can the Tax Coalition,” the public is not generally aware of that it is industry behind the ads.

If one industry tactic is to hide behind a front group with a diverse array of spokespersons, another is to use the front groups to shift the terms of the debate or refocus the debate on a different topic altogether. Thus, we see ABA front groups and ad campaigns working hard to shift the discussion from “soda tax” to “grocery tax” and from the public health impacts of sugary drinks to the “high cost of living.” Many ABA ads in soda tax campaigns across the nation pound the “grocery tax” theme, claiming that it hurts small business and all consumers, even those who don’t drink soda. Learn more about industry tactics from the Center for Media and Democracy publishers of Sourcewatch.org in this article Bills to Ban Local Soda Taxes Are Moving In the States, Coke and Pepsi Borrow from the Tobacco Playbook.

State Preemption of Local Ordinances, At Industry's Behest States Move to Ban Local Soda Tax Ordinances

When all else fails, powerful industries sometimes move to ban local control of policies they do not like, including nutrition-related policy. In this tactic, industry is taking a page from the big tobacco playbook. Tobacco has battled across the nation to preempt all sorts of local tobacco controls, for instance, twelve states preempt local smoke-free ordinances that are stronger than state standards.

There has already been preemption of local ordinances related to nutrition in nine states.

• Alabama
• Arizona
• Florida
• Georgia
• Kansas, 2016
• Mississippi
• Ohio
• Utah
• Wisconsin
• Michigan, 2017
• Arizona, 2018

Recent state level bills interfering with local democracy, banning local food and nutrition ordinances including soda taxes.

1. 2016 Kansas bill HB 2595/SB 366 preempted local regulation of “food nutrition information, consumer incentive items, food-based health disparities, the growing and raising of livestock or crops, and the sale of foods or beverages,” according to Grassroots Change. The author of the bill was Rep. Gene Suellentrop (R-27), a member of the American Legislative Exchange Council (ALEC). Campaigners report that some of the language and concepts in this large bill appear to be borrowed from a 2012 ALEC “model bill” called “The Food and Nutrition Act,” which was a response to the Mayor Bloomberg’s effort to get calorie count labelling in the city of New York. Learn more about this bill here.
2. 2017 Michigan House Bill 4999 sponsored by Rep. Rob Verheulen in the House and R-Walker, Sen. Peter MacGregor, R-Rockford, was introduced Sept. 20 and signed into law on Oct. 31. The bill bans an excise tax “on the manufacture, distribution, wholesale sale, or retail sale of food for immediate consumption or nonimmediate consumption.” A host of agricultural interests registered in favor of the bill including the Michigan Farm Bureau, Michigan Sugar Company, Michigan Sheep Producers, Michigan Soybean Association, Michigan Cattlemen’s Association, Michigan Potato Growers and more making it a “farm interests” bill. In addition, the Michigan Manufacturers Association was involved as was the National Federation of Independent Businesses. NFIB testified in favor of the bill and was credited by the media as being a major play. NFIB is a large trade association that has worked to preempt paid sick days and city-based minimum wage hikes.
3. 2018 Arizona HB 2484, authored by Rep. T.J. Shope. This bill broadly discusses food taxation not just a beverage tax or a soda tax. The groups registered against the bill include: Arizona Retailers Association, Arizona Restaurant Association, Arizona Beverage Association, Arizona Food Marketing Alliance, Arizona Free Enterprise Club, Arizona Tax Research Association, Arizona Chamber of Commerce and Industry, United Dairymen of Arizona. CMD has submitted an open records request to the bill authors for more information.
4. In Washington State, industry started a state wide ballot initiative campaign that would prevent other cities in the state from implementing a similar tax. The initiative committee Yes! To Affordable Groceries was registered February 26, 2018.

Other Groups Involved

The ABA is getting help from many groups who have been previously involved in preemption battles. Affiliates of the U.S. Chamber of Commerce have been active in local fights along with restaurant and grocers associations. Front group propagator and master propagandist Richard Berman cut ads in Sante Fe for a State Policy Network “think tank,” prompting an ethics complaint. State Policy Network groups have been producing and promoting questionable research saying that the soda tax harms the economy. An ALEC legislator successfully preempted local food and nutrition policies with an ALEC “model bill” in Kansas. And the National Federation of Independent Businesses, which has been battling paid sick leave ordinances, lobbied in favor of soda tax preemption in Michigan.

Resources

1. Center for Media and Democracy articles:
   
   • Reporters Memo: Coke and Pepsi Play Hardball in Attempt to Prevent the Spread of Soda Taxes
     
   • Trampling Local Democracy: Beverage Industry Pushes Soda Tax Ban in Harrisburg
     
   • Bills to Ban Local Soda Taxes Are Moving In the States, Coke and Pepsi Borrow from the Tobacco Playbook
     
   • Soda Money Flows Into Cook County Races, But Comes Up Flat
2. Website of Grassroots Change and the “Preemption Watch” newsletter
3. Website of Local Solutions Support Center
4. Soda Tax Advocates Just Got a New Weapon in Their Battle Against Sugar
5. Taxing Soda and Booze Can Spark Healthy Spiral, Experts Say
6. Center for Science in the Public Interest, tracks ABA spending on the soda tax issue and is suing Coke and the ABA for deceptive advertising practices.