Last week the Northern California beach town of Santa Cruz enacted a tax on sodas, ice teas and other beverages with added sugar. Voters approved the 2-cent-per-ounce tax in November, despite the beverage industry pouring at least $1.2 million in opposition.
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Besides generating an estimated $1.3 million for the city, the tax aims to curb the overconsumption of sugary drinks, which research has shown to work. Drinking too many sugary drinks can lead to heart disease and Type 2 diabetes, said Blythe Young, a lobbyist for the American Heart Association, a key proponent of the tax.
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- Young: “The average American consumes a bathtub full of sugar from sugary drinks annually, or 30 gallons.”
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But the tax also exists in defiance of state law — sort of.
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Let’s back up: In 2018 California lawmakers brokered a deal with the beverage industry to preemptively ban local governments from implementing local grocery taxes until 2030.
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That law included a provision requiring the state to withhold local sales tax revenue from any city imposing its own new grocery tax, even if a court determined that the tax “is a valid exercise of a city’s authority.”
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Charter cities — which under California’s constitution are granted more flexibility from some state laws — took that part personally. Especially Santa Cruz, at the time poised to put a soda tax proposal before voters, which it then had to scrap.
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But, in 2023 a state appeals court ruled that the withholding revenue part of the law was unconstitutional, giving Santa Cruz’s city council the green light to move forward with a soda tax. So, the law against cities enacting their own grocery tax is still in effect, but the law has no teeth (perhaps appropriate for a law effectively protecting sugar consumption).
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In a statement to CalMatters, the American Beverage Association said it is assessing next steps, decrying Santa Cruz’s tax as illegal and an “unfair burden on working families struggling with record-high prices.”
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A legal dispute would serve as yet another instance of a city attempting to carve out more autonomy. Cities have recently fought to enact their own housing policies, election rules and book bans. But instead of coming to blows with the state (or the federal government at times), Santa Cruz would be facing a multibillion-dollar industry.
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- Shebreh Kalantari-Johnson, Vice Mayor of Santa Cruz: “We’re ready for that. … It does not have to be the case where people with money or special interests can dictate how a city, county or state makes decisions. It should not be.”
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