California City Proposes One Cent Tax on Sodas to Provide Badly Needed Revenue

Drink Lobby Gears Up to Fight Soda Tax Plan in California City

July 27, 2012

Reuters - Beverage industry groups are planning ways to oppose a proposed soda tax in the California city of El Monte because of fears other U.S. cities across America might adopt similar taxes on sugary drinks.

The El Monte city council on Tuesday approved a measure that would add a 1 cent tax for every ounce of "sugar sweetened" drinks. The proposal is scheduled to be voted on by city residents in November's election.

El Monte's mayor said the tax would provide badly needed revenue for a city that has been forced to slash its workforce to save money, and would help fight obesity in a city where half the children have weight problems.

Industry groups quickly said they will marshal forces to kill off the measure. They already are fighting a similar tax proposed two months ago by the city of Richmond, California.

"Even if those don't pass in November, there could certainly be the potential of future tax threats in other cities," Karen Hanretty, vice-president of public affairs for the American Beverage Association, said.

"We will support any 'no' campaign," Hanretty said.

Rising deficits have forced three California cities to file or plan bankruptcy petitions since June. The city council of San Bernardino voted on July 19 to seek Chapter 9 protection.

"This tax is a sign of the times," said Bob Achermann, executive director of the California/Nevada Soft Drink Association, said. "City governments are looking for revenue. We think this is a misguided approach."

El Monte's mayor, Andre Quintero, said his city is not facing bankruptcy and had managed to balance its budget for fiscal year 2013.

But in a city with 13.7 per cent unemployment, far exceeding the national average of 8.1 per cent, El Monte cut its workforce from 420 employees to 290 in the past four years.

"We have long-term challenges," Quintero said. "We need the revenue."

With more Americans concerned about obesity, especially in children, the campaign against soft-drinks is gaining momentum from coast to coast.

In New York City, Mayor Michael Bloomberg has proposed a ban on large sodas, the first of its kind in the nation, which New York's Board of Health is expected to pass in September.

Bloomberg's proposal would limit servings of sugary drinks to 16 ounces (473 ml) at most restaurants, theaters, delis, vending carts and stadium concessions.

A state-wide soda tax proposal last year by Democratic Californian assemblyman Bill Monning failed after vigorous opposition from a broad coalition including the California Chamber of Commerce and the California Restaurant Association.