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State deal saves SF soda tax, blocks other cities from imposing their own

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Gov. Jerry Brown on Thursday signed a deal that prevents cities from imposing soda taxes like one passed by San Francisco voters in 2016. The City’s tax was grandfathered in under the ban, which will remain in effect for the next 12 years. (Kevin N. Hume/S.F. Examiner)

A deal cut by state legislators Thursday allows San Francisco’s soda tax to remain in place but will prohibit other cities and counties throughout the state from passing similar soda taxes for the next 12 years.

Gov. Jerry Brown on Thursday signed into law legislation establishing a moratorium on taxes on “groceries” until 2031. The measure, which is is retroactive to January 1, 2018, grandfathers in The City’s one-cent per ounce soda tax, which was approved by voters in 2016 and generates some $10 million annually in revenue. However, it prohibits additional assessments or increases to the tax.

As reported by the Sacramento Bee, the soda tax ban was passed as a compromise with the beverage industry in return for the removal of a measure from the November ballot that would have made it harder for local governments to pass tax measures.

SEE RELATED: Soda tax funds start pouring in to SF city coffers

Locally, the ballot measure could have forced the repeal of two recently passed measures: Proposition C, which raises the tax on commercial rents to 3.5 percent for landlords with annual gross receipts over $1 million in order to fund childcare subsidies, and Proposition G, a parcel tax that will increase wages for San Francisco’s educators.

The measure’s backers agreed to withdraw the measure in exchange for the soda tax ban in a political deal reached with labor unions and legislators last Saturday.

“Our aim is to help working families by preventing unfair increases to their grocery bills,” said a spokesperson for the American Beverage Association in a statement shared with the San Francisco Examiner. “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.  We believe the legislation approved today will allow us to work toward these goals.”

Supervisor Norman Yee, who authored Prop. C, called the deal an example of “corporate money at its worst when the soda giants use their money to protect the continual practice that harms the health of our children.”

“The passage of AB 1838 in exchange to withdraw a state tax initiative that would make it difficult to pass new tax revenue measures is a bitter drink that’s hard to swallow, and no sweetener can change that,” said Yee.

He added that while the soda tax ban does not impact San Francisco “as far as having a soda tax” and leaves Prop. C intact, “taking the chance to defeat the state initiative may have been worth the fight for the larger community of children in California. “

Brown, like some state legislators who voted for the soda tax ban, was reluctant to express support.

In a memo sent to assembly members, Brown said that only four out of 482 cities in California are in the process of considering passing a soda tax. Along with San Francisco, Berkeley and Oakland have already passed similar taxes despite heavy campaigning against them and threats of lawsuits by the soda industry.

“In response, the beverage industry has circulated a far reaching initiative that would, if passed, raise the approval threshold from 50 percent to two-thirds on all measures, on all topics, in all 482 cities,” said Brown, adding that mayors from “countless cities called to voice their alarm” and support “the compromise which this bill represents.”

Brown added that the initiative contained language that would restrict the “normal regulatory capacity of the state by imposing a two-thirds legislative vote on what is now solely within the competency of state agencies,” adding that signing the soda tax ban therefore “is in the public interest.”

State Sen. Scott Wiener, D-San Francisco, who voted against the compromise, took to Twitter to call the soda industry’s counter initiative “a vile move,” but added that he “fully respects” his colleagues’ decision to “vote for it and avoid a ballot measure to decimate city finances.”


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