California Gov. Brown Signs Grocery Tax Moratorium

Published August 14, 2018

Gov. Jerry Brown of California signed a law temporarily prohibiting cities and counties in the state from enacting new grocery taxes or increasing existing levies on groceries, including sugar-sweetened beverages (SSBs).

Assembly Bill 1838 took effect immediately upon Brown’s approval on June 28 and is retroactive to January 1, 2018. The law preempts grocery tax proposals targeting SSBs that were under consideration in Sacramento, Santa Cruz, and Richmond.

The moratorium on local grocery taxes expires in December 2030.

Pols and Prohibitionists

Joe Carter, a senior editor at the Acton Institute, says taxes on SSBs, commonly referred to as “soda taxes,” are supposed to use fiscal policy to make people choose better foods.

“Soda taxes are excise taxes that are specifically intended to target certain goods deemed harmful to society but that we don’t want or can’t ban completely, such as tobacco or alcohol,” Carter said. “The idea is that by adding or increasing the tax, it increases the overall price of the good, thereby lowering consumer demand.”

Kerry Jackson, a researcher in California studies at the Pacific Research Institute, says soda taxes create a coalition of nosy prohibitionists and revenue-seeking politicians.

“They see money streams out there that they can’t get to, and they’re going to find a way to get to them,” Jackson says. “They’re backed by do-gooders in the private sector who believe they have the authority, power, and privilege to tell people what they can and cannot put inside their bodies. They play well with each other. As a result, you get this type of situation.”

Soda Revenue Streams

Carter says soda taxes use low-income households as ATMs for government.

“Sin taxes tap into the basic law of supply and demand—if you raise the price of a good or service, it will lower the demand—but the problem with this approach is that the tax isn’t high enough to reduce consumption enough to truly change people’s behaviors,” Carter said. “All that it really does is make certain goods and services more expensive for those who can least afford it. The poor tend to drink more soda than wealthy Americans because soda is cheaper than most other options.

“Even with the increased tax, a can of Dr. Pepper from a vending machine is always going to be cheaper than a soy macchiato latte from Starbucks,” Carter said. “All the tax does is take more money out of the pockets of those who don’t have much to begin with.”

Suggests Education, Not Taxation

Instead of taxing people’s eating habits, lawmakers should work to educate people and convince them to eat healthier, Jackson says.

“They have a First Amendment right,” Jackson said. “They can make speeches. They have a bully pulpit, being elected officials. They can write op-eds. But when it comes to using legislation, you’re using force to impose what you think are good ideas.”