California Passes Law to Stop Collecting New Taxes on Soda Drinks

June 30, 2018 Last Updated: June 30, 2018

A bill that prevents new local taxes on groceries, including soda and other sugary non-alcoholic beverages, until 2031 was signed by Governor Jerry Brown on Thursday, June 28.

AB 1838, which comes as a part of the 2018-19 budget package, prohibits future taxes on groceries imposed by California cities and counties, as well as nullifies those already created after January 1, 2018. Such taxes imposed before this date would be exempt.

Even though he signed the bill, Gov. Brown in a statement accused the beverage industry of creating pressure on the legislature to pass the bill by supporting a ballot initiative, which would raise the approval threshold of new local taxes to a two-thirds majority vote from the public and a two-thirds vote at the state legislature.

The initiative was a California constitution amendment, which if passed, would have brought much difficulties to California state and local government in raising taxes and revenue.

The initiative campaign received millions of dollars from American Beverage Association California and collected enough signatures to make it on the November ballot.

Under these circumstances, the California legislature quickly but reluctantly passed AB 1838 to avoid facing more serious consequences from the initiative. As a result, the initiative was taken down by its creators after the bill was signed.

According to The Sacramento Bee, over the past few years, four cities in California have created a tax on sugary drinks. In Berkeley, sugary drinks come with a one-cent-per-ounce tax, which caused a decline in soda sales.

AB 1838 was considered by Governor Brown and a few legislators as a pushback from the soda industry. Sen. Scott Wiener (D-San Francisco), who voted against the bill, said the initiative was a “nuclear weapon” that forced the legislature to pass the bill.

However, the American Beverage Association said their “aim is to help working families by preventing unfair increases to their grocery bills. 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.”