Council voted 3-2 against initiative to tax sugar-sweetened beverages.
On Feb. 2, the Davis City Council voted to halt plans to put a soda tax initiative on the June 2016 ballot for the municipal elections. The council voted 3-2 against the proposal.
The tax was modelled on the soda tax in Berkeley, which was approved by voters in November 2014, making Berkeley the first city in the nation to implement a tax on sugar-sweetened beverages.
The proposed tax would have been $0.01 per ounce on all sugar-sweetened drinks and would have excluded diet sodas, such as Coke Zero. It would have been applicable wherever these beverages were sold, including cafes, restaurants, vending machines, supermarkets and convenience stores.
Davis Mayor Pro Tempore Robb Davis supported the tax but was left disappointed when the measure failed to get the four votes needed for the tax to proceed to the ballot. He emphasizes that, while the City Council may not have seen the measure favorably, Davis voters were ready to embrace the idea.
“It’s disappointing for me that we weren’t able to get it onto the ballot, especially because Berkeley has already done it […] I thought there was no problem in getting the community to vote on it […] I think [the tax] could have easily passed with the voters. We are a community that is concerned about health,” Davis said.
According to Davis, while it is unlikely that the tax will appear on the June ballot, a petitioning effort to make the city hold a special vote on the initiative is underway.
However, many small businesses, including Froggy’s Grill and Posh Bagel in Downtown Davis, spoke up against the measure, arguing that it would place administrative burdens on them and force them to absorb the cost of the tax in order to keep prices competitive.
The California Restaurant Association (CRA), an organization which represents restaurant owners across the state, lobbied against the tax after being contacted by local businesses.
Javier Gonzalez, senior legislative director at the CRA, explains that the tax would have hit small businesses that already have a very thin profit margin of between four and six percent.
“Every penny matters and so this would drive the cost up […] The restaurant is going to have to increase prices or, in order for them to remain competitive, absorb that cost and it’s going to affect their bottom line,” Gonzalez said.
Gonzalez strongly believes that the tax would hurt businesses, citing recent hikes in costs due to government measures such as the Affordable Care Act, paid sick leave and an increased minimum wage.
Gonzalez also disagrees that the measure was necessary in order to combat obesity and help promote a healthy diet. He believes that the restaurant industry is already doing its bit to help out health-conscious consumers.
“Restaurants offer an array of healthy options, low caloric or non-caloric beverages […] I know that our industry has been very responsive to consumers wanting additional healthy options; we are offering caloric information to consumers when they are making [drink choices],” Gonzalez said.
The CRA has been lobbying against the tax for the past few months. The organization sent out letters to both Mayor Wolk and the City Council, articulating its position and urging its members to speak out against the initiative.
Despite those concerns, Councilmember Brett Lee still believes the initiative would be beneficial and argues that the tax itself is not sufficient enough to deter consumers from frequenting certain establishments.
Lee finds many of the arguments against the tax, including those from the CRA, to be based on false grounds and argues that the initiative’s opponents have exaggerated its consequences.
“If the [CRA] thinks that the soda that used to be $2 and is now going to cost $2.12 […] is going to put restaurants out of business, I don’t share that view,” Lee said. “I think that’s a bogus argument.”
Many have also argued that the tax would be regressive and that the higher prices would disproportionately affect the poorest in society. However, Lee rejects that argument.
“What’s interesting is that when the polling is done, […] it’s the people who earn the least that are most supportive of the tax because they understand that by paying a little bit more, there are benefits to society. They are the ones that are on the frontline of the obesity issue and the lack of knowledge of what a healthy diet is,” Lee said.
Although the measure was rejected, Lee is confident that the proposal will return in the next municipal election in 2018.
“I think it is one of those things where Davis was hoping to be on the forefront,” Lee said. “It’s kind of a novel concept, whereas I think two years from now it will be much more commonplace.”
Written By: JUNO BHARDWAJ-SHAH – city@theaggie.org
