Thursday, September 24, 2020
Sept. 24, 2020

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Initiative 1634 bottles up local options

Critics concerned about ramifications of soda-tax measure

By , Columbian staff writer
Published:

Clark County shoppers don’t pay sales tax on groceries or soda, and they shouldn’t expect to start after Initiative 1634 passed in November’s midterm election with flying colors.

It’s tricky to gauge the local impact of I-1634 because there aren’t any immediate ramifications for never being able to impose a law that didn’t exist in the first place. However, its effects could play out in the coming years, because the initiative took a potential local taxing option off the table.

The initiative banned local governments from imposing new taxes on grocery and soda items. I-1634 passed statewide by 55.8 percent to 44.2 percent of votes. It also passed in Clark County — 53.8 percent to 46.2 percent.

“This measure would prohibit new or increased local taxes, fees, or assessments on raw or processed foods, beverages, or their ingredients, intended for human consumption except alcoholic beverages, marijuana products, and tobacco, unless they are generally applicable and meet specified requirements,” the measure’s text states. State and federal governments are not affected by the initiative, and local governments can still impose broad sales taxes, as long as they don’t specifically target groceries.

For Heidi Schultz, board president at Ridgefield’s Corwin Beverage Company, the block on local soda and grocery taxes was a welcome development.

Schultz, who also serves as president of the Washington Beverage Association, has been vocal about her support for the initiative.

“In 2010, our company was hit with food and beverage taxes when the Legislature passed an excise tax on some of our products. We lost a significant amount of sales — 15 percent — during the time the tax was in place. We had to make cuts to our operations and labor,” she wrote in an email to The Columbian.

“We fight hard to run a good business because we care about the community that supports us. Passing I-1634 closed a loophole that could have put us in a position similar to the one we faced in 2010,” she said.

Detractors of the initiative, however, said it was confusingly worded fear-mongering — written to make it sound like the initiative was blocking an imminent grocery tax, instead of a future hypothetical taxing option.

They also claim it takes away the power and flexibility of small communities to govern themselves and impose taxes how they see fit.

“This confusing measure imposes a one-size-fits-all state law that takes power away from voters and hands it to the state, silencing our voice in local decision-making,” the WA Healthy Kids Coalition argued in its opposition statement.

It’s about soda

The initiative was worded to address local taxes on all grocery items. But ultimately, I-1634 came down to soda, which qualifies as a grocery item.

The campaign for I-1634 was funded by four beverage companies — combined, The Coca Cola Company, PepsiCo Inc., Dr Pepper Snapple Group and Red Bull North America contributed 99.93 percent of the $20,204,044 budget for the measure’s supporting committee, “Yes! To Affordable Groceries.”

Proponents of the ban on local grocery taxes argued that taxing food and beverage items is a regressive form of taxation that disproportionately hurts working-class families.

“We supported I-1634 because, strategically, its passage was important to the future for our fourth-generation family-owned business. We also supported it based on principle: If beverages are the thing to tax now, what is next? Meat? We’ve heard that one floated. Non-organic food? The passage of I-1634 takes this uncertainty off the table for our communities,” Schultz wrote.

In January, Seattle voters approved a tax that imposes 1.75 cents per fluid ounce on sugary beverages, which raised $10.5 million in the first six months, making it one of eight cities in the U.S. to impose a fee on soda purchases. Seattle’s tax will be grandfathered in under I-1634.

In Oregon, Measure 103 — essentially a sister law to I-1634 — failed by a wide margin, 57.4 percent to 42.6 percent. Oregon voters preserved the right of local governments to impose taxes on groceries or soda.

Earlier this year, the Coalition for Healthy Kids toyed with the idea of gathering signatures to place a soda tax on November’s ballot in Multnomah County, Ore., though it eventually postponed the move. Measure 103 was viewed as a response to that near-measure, a preemptive strike against any future soda taxes that ultimately failed to appeal to voters.

It was a drastically different outcome from Washington, where consumers who already pay sales taxes on most consumer goods rejected the prospect of dues in their grocery carts.

Under the radar

Vancouver Mayor Anne McEnerny-Ogle said the city council has never proposed a grocery or soda tax. The local government did not discuss I-1634 at all.

No citizens ever brought the issue to a public forum, either, she added.

“This was never on our radar so we haven’t had those discussions,” McEnerny-Ogle said. “It’s all hypothetical.”

Instead, the council is pursuing the options detailed in Vancouver Strong, a plan to bring in $6.1 million in local tax revenue. The package will include an admissions tax, a parks impact fee, a utility tax increase and a Downtown Business Improvement Area fee, among others.

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