Why Pro-Soda-Tax Ad in Bay Area Is Misleading, Part II

The November ballot in Oakland and San Francisco will feature proposals for a soda tax in each city, known as Measure HH and Proposition V, respectively, which would charge soda distributors an additional one cent per ounce of soda they sell in each city (or $2.88 per case). The tax would also apply to the distribution of other sugar-sweetened drinks.

In September, I showed that soda-tax advocates, including Michael Bloomberg, are lying to the public when they say in their television ads and political flyers that “it’s not a grocery tax, it’s a soda tax.” In fact, Oakland and San Francisco grocery buyers will face higher grocery bills as a result of the soda tax. But the lies of tax proponents don’t stop here.

The pro-tax ad below says that voters should take the court’s word, “which just ruled that the soda tax is in fact only a tax on soda.” But this isn’t what the court said.

The court case referenced in the ad is Coffey v. Simmons, and here’s what the presiding official, the Honorable Thomas A. Rasch, commissioner of the Superior Court of Alameda County, actually said:

To state the issue [that the proposed tax would be imposed on local grocers because the distributors would pass the tax through to the local grocers who would then pass the tax on to the consumers] is to recognize the obvious that local grocers and other retailers will likely pass the tax through the chain of distribution to the ultimate consumer.

Commissioner Rasch says it’s obvious that grocery consumers will pay for the tax. As I explain in my earlier commentary, the tax is imposed on soda distributors (the tax’s imposition), but the burden of the tax (the tax’s incidence) will fall on grocery buyers because distributors will pass the soda tax on to grocers who, in turn, will pass the tax on to their retail customers by increasing the retail price of any product or products they choose in their store. Commissioner Rasch, to his considerable credit, understands this.

The soda tax is also a regressive tax, meaning it would harm lower-income families more than higher-income families because poorer households already spend a greater portion of their budgets on groceries. Bernie Sanders understands this and thus opposes soda taxes (see “A Soda Tax Would Hurt Philly’s Low-Income Families,” Philadelphia Magazine, April 24, 2016).

Despite lies by soda-tax advocates, the truth is that the soda tax is a discriminatory tax that unjustly harms lower-income and minority families most by increasing grocery bills. The soda tax is socially unjust and discriminatory.

Lawrence J. McQuillan is a Senior Fellow and Director of the Center on Entrepreneurial Innovation at the Independent Institute. He is the author of the Independent book, California Dreaming: Lessons on How to Resolve America’s Public Pension Crisis.
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