California Soda Tax Ban Saves Local Taxing Powers

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California Soda Tax Ban Saves Local Taxing Powers

 

Governor Jerry Brown signed a bill in late June banning local governments from imposing soda taxes, but he was not happy about it. Many legislators who supported the bill were not very keen on it, either.

 

So why are soda taxes now banned in the Golden State? It all has to do with preserving the ability of local governments to raise taxes. The beverage industry was pushing a statewide initiative that would have made it more difficult for local governments to increase all taxes and many fees. In return for a ban on soda taxes, the beverage industry withdrew the initiative.

 

The initiative being proposed would have required that any local governmental body seeking to increase taxes and certain fees could only do so through a two-thirds vote. Then such a tax increase could only go into effect if it was approved by two-thirds of the voters. Any tax increase that would have been proposed under the state’s initiative system would also have had to receive approval by two-thirds of the voters under this proposal.

 

Governor Brown and legislators did not like such restrictions on local governments’ taxing power. They worked with the beverage industry to craft a compromise measure that would end the threat of local soda taxes. Prior to the law being signed, four municipalities in the state imposed such taxes.

 

Some legislators were glad to see the soda tax ban, but were displeased that such a ban would short-circuit the larger tax limitation measure. They said that this compromise bill ignored the voices of the more than one million Californians who signed petitions to place the tax limit measure on the ballot.

 

Those supporting the compromise bill said that the tax limit initiative would have crippled local governments’ ability to raise revenue. They said it was better to stop soda taxes rather than impose new limits on how local governments can increase other taxes.

 

Do you agree with California banning soda taxes? Should local governments be required to get approval from two-thirds of voters before they increase taxes or fees?

 

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