Campaigns on Oakland’s Measure HH spar over ‘soda’ vs. ‘grocery’ tax

Health officials call it a “soda tax” that will fund health initiatives in Oakland while attempting to curb high rates of obesity, type 2 diabetes, tooth decay, heart disease and other chronic conditions linked to excessive sugar consumption.

But others—funded by sugary beverage makers—are calling it a regressive “grocery tax” that would force small businesses to raise prices, accelerating the rising cost of living in Oakland.

While a soda tax by another name may not sound as sweet, there’s no denying the battle surrounding Measure HH relies heavily on semantics.

In November, voters will decide on Measure HH, placed on the ballot by the Oakland City Council. If passed, Measure HH would create the “Chapter 4.52 – Sugar-Sweetened Beverage Distribution Tax Ordinance,” a one-cent-per-ounce excise tax on distributors of sugar-sweetened beverages that would take effect July 1, 2017.

The tax would be paid by distributors of the beverage—not the consumer—as city and county governments cannot increase sales taxes on beverages. The measure doesn’t dictate that the added taxes be passed on to soda shoppers. Unlike other “sin taxes” on tobacco products or alcohol, it would be up to each distributor how to handle the cost.

The passage of Measure HH would make Oakland the second Bay Area city with such a tax. Berkeley passed a similar measure in 2014, while other cities—such as Richmond, El Cerrito, and San Francisco—had the measures fail at their ballot boxes. Two other cities—San Francisco (Proposition V), and Albany (Measure 01)—will vote on similar measures this year.

Those in favor of Measure HH call themselves “Oakland vs. Big Soda,” but are officially known as the “Coalition for Healthy Oakland Children with major funding from Michael Bloomberg and Action Now Initiative.” The campaign against is officially the “No Oakland Grocery Tax, with Major Funding by American Beverage Association PAC,” but simply call themselves “No Oakland Grocery Tax. No on HH.

Supporters of the tax argue that it’s truly a tax on soda, just as the name implies.

“This is a tax on distributors of sugar-sweetened beverages,” said Diane Woloshin, director of the Coalition for Healthy Oakland Children and a former health care program administrator for the Alameda Public Health Department.

Under the ordinance, beverages—excluding baby formula, medical beverages, meal supplements, milk products from plants or animals, alcohol, or juices without added sweeteners—containing added “sucrose, fructose, glucose, other sugars, and high fructose corn syrup” would be subject to the tax.

For example, a distributor selling a 20-ounce soda would have to pay $0.20 in extra taxes on the sale. Diet sodas containing none of those sweeteners would be among those exempt from the taxes, along with beverages sold by distributors who do not exceed $100,000 in annual gross receipts.

But Joe Arellano, an independent consultant and spokesman for campaigns opposing sugary beverages this election in Oakland, San Francisco and Albany, said “plain and simple, it’s a grocery tax.”

The measure, he said, will affect “mom and pop” grocery stores who would have to raise the prices on all their products, not just sugar-sweetened beverages, to make up for the tax. “Anyone who has taken an economics class knows that when you impose a new fee you have to make up that tax somehow,” Arellano said. “If you have a new cost, you have to make up that cost.”

It’s also the core of the messaging appearing in the mailings and other advertisements in English, Spanish, and Chinese from the No on HH camp. “Sack the Grocery Tax. No on HH” posters hang in the windows of some Oakland small groceries, some of whose owners have appeared in advertisements.

An email to the No on HH subscriber list featured Letosha Scott, the store manager of La’Christa Café on Telegraph Avenue in Downtown Oakland. “Let’s be clear: Measure HH is a tax on food and groceries. It will hurt low-income and working families the most,” the email said. “If you do the research, you can clearly see grocers and restaurant owners cannot afford this tax.”

On August 31, attorneys from the San Rafael law firm Nielsen, Merksamer, Parrinello, Gross, & Leoni filed a petition in Alameda County Superior Court on behalf of an Oakland restaurant owner, Isabella “Ma Bella” Coffey, contesting the wording on the November ballot by arguing Measure HH contained “false and misleading statements” relating to its negative financial impact on small businesses. They argued grocers would ultimately pay the tax.

“Measure HH is merely the latest attempt by a municipality in California to generate revenue by proposing a tax on sellers of sugar-sweetened beverages,” their petition to the court states.

On September 2, Alameda County Superior Court Commissioner Thomas Rasch ruled the wording can stand as it is written. The wording on the ballot—“the tax is not paid by your local grocer” —“is not false,” he ruled.

Oakland city council member Rebecca Kaplan (at-large), one of three councilmembers who proposed the ballot measure, which was unanimously approved by the rest of council, said the ruling confirms that Measure HH is about sugar-sweetened beverages, not groceries.

“I think it is great news that we prevailed in the ridiculous lawsuit from the soda industry, and I think that result just shows the truth we’ve been saying all along,” she said.

Holly Scheider led the Berkeley Healthy Child Coalition, which campaigned for their city’s tax, and now leads the pro-tax campaign in Albany. She said the soda industry spends large amounts of money against these kinds of taxes by pitting one side of a community against one another.

“The main thing they’re doing is raising doubt it’s a sugary drink tax,” Scheider said. “They [the American Beverage Association] lie and don’t care because they want a job.”

Campaign disclosure forms show the No on HH campaign attorneys are paid with funds from the American Beverage Association (ABA), a trade group that represents Coca-Cola, Dr. Pepper Snapple, Pepsi, Red Bull North America, Sunny Delight, Tampico, and other popular non-alcoholic beverages filling the coolers of corner stores, markets and grocery stores across the nation. The association disclosed spending $600,000 of the $747,267 spent by the No on HH campaign, according to its records from the first six months of the year.

Neither Elli Abdoli, No on HH’s campaign attorney, nor Coffey responded to a request for comment. A spokesperson for the ABA referred questions to Arellano.

Despite Rasch’s ruling, Arellano argues local grocers will have to pass the tax onto consumers.

When asked why the ABA—which has successfully helped defeat all but two taxes on sugar sweetened beverages by spending millions of dollars to oppose them— is funding the battle against the tax, instead of a grocery group like the National Grocer’s Association, Arellano said, “It’s being sold as a tax on soda.”

In 2014, Berkeley became the first U.S. city to pass a per-ounce tax on sugar-sweetened beverages. The ABA paid more than $2.4 million to campaign against the measure, according to a report from the Center for Science in the Public Interest.

Oakland and other California cities have mimicked Berkeley’s model, specifying that the taxes would be deposited into the city’s general fund. This allows the measure to be passed with 50-percent-plus-one vote, instead of the two-thirds vote required to pass a tax that would earmark the funds.

Like Berkeley, Oakland’s tax revenue would be overseen by a special committee, which includes, among others, appointees from the medical community, the Oakland Unified School District, and neighborhoods most affected by the negative health effects of regular soda consumption.

In June, Berkeley’s Sugar-Sweetened Beverage Product Panel of Experts Commission allocated $637,500 of the more than $2 million generated from the tax so far to the Ecology Center, Healthy Black Families, Berkeley Youth Alternatives, and two YMCA programs focused on reducing obesity and diabetes.

Measure HH would curb people from buying sodas, while the taxes gleaned from those who do drink them would help fund much-needed health programs in Oakland, Woloshin said.

“Berkeley’s model is working. We think we took the best of the Berkeley model and added what was needed in Oakland,” she said. “It’s really about the health of Oakland children.”

Health officials are calling Berkeley’s tax a win because it resulted in a 21 percent drop in consumers buying sugar-sweetened beverages in Berkeley, while cities without the tax saw an increase in consumption, according to a study published last month in the Journal of American Public Health.

Dr. Jen Falbe, a postdoctoral research fellow at UC Berkeley’s School of Public Health and the lead author on the study, and her team came to that conclusion by interviewing shoppers outside corner stores in lower-income, ethnically diverse neighborhoods in East and North Oakland, San Francisco, and Berkeley before and after Berkeley’s tax went into effect. Overall, Falbe said it made shoppers think twice about buying a sugary beverage, resulting in a 63-percent increase in water consumption.

“Minority and low-income populations really bear the brunt of diabetes, heart disease, obesity, these health consequences that are linked to sugary drink intake,” she said. “Lower income people might be more price sensitive. Kids, teens and adolescents have even lower amounts of money to spend on food and beverages.”

Falbe is currently researching how stores and grocers have made up for the soda tax in Berkeley. As of late August, of the 19 interviews her research team had done with small and large businesses, none reported passing on the added costs to non-beverage items, she said.

“Most reported raising the prices of beverages only,” she said. “Some did say they were eating the costs.”

Both sides of the campaign are spending big money to argue for whether Measure HH is truly a “soda” or a “grocery” tax.

Arellano said the anti-tax campaign has $9.5 million in TV ad time reserved with Bay Area television stations.

Michael Bloomberg, media billionaire and the former New York mayor who attempted to limit soda sizes, disclosed Thursday that he has contributed $348,155 to fund the pro-tax side. The Action Now Initiative, a nonprofit organization funded by former Enron billionaire John Arnold and his wife, Laura, which supports the tax, have yet to disclose their contributions.

The Coalition for Healthy Oakland Children disclosed spending $23,297 on their campaign up to June 30.

[This story has been updated to correct an error regarding the unit of measure taxed by Measure HH. It is one-cent-per-ounce]

17 Comments

    • Jay

      Seems like you didn’t read this:

      Oakland North welcomes comments from our readers, but we ask users to keep all discussion CIVIL and ON-TOPIC. Comments post automatically without review from our staff, but we reserve the right to delete material that is libelous, a personal attack, or SPAM. We request that commenters consistently use the same login name. Comments from the same user posted under multiple aliases may be deleted. Oakland North assumes no liability for comments posted to the site and no endorsement is implied; commenters are solely responsible for their own content.

  1. Kate

    I am confused. I can usually understand bills, and proposed bills, but if grocery stores are going to raise food prices because soda will cost more for them to buy, and it will trickle down into their grocery prices–?

    If the big manufacturers of soda are supposed to be absorbing this cost, why are local stores worried about it? I don’t get it.

    • DrD

      My interpretation of this article is that local stores AREN’T worried about the tax. If these local stores had a strong reason to worry, other organizations like the National Grocer’s Association (this is mentioned in the article) would be funding these anti-tax campaigns. The clearest sign that this tax IS good for us is that the American Beverage Association (aka, Pepsi, Coke, and others) are bankrolling the anti-tax messaging. Nobody else is worried about this tax except them because it means Pepsi and Coke won’t make as many millions of dollars. I’m not a small grocery business owner, so if someone from that group would like to chime in here, that’d be nice. But to me, it is offensive that the American Beverage Association is implying they’re sticking up for the small business owners by pouring hundreds of thousands of dollars into this anti-tax campaign. If Pepsi and Coke actually cared, you might hear about how they give back to or support small business owners or local communities in some other way. BUT YOU NEVER HEAR THAT. The only reason it SEEMS like you’re hearing that here is because they’re screwing with the messaging because this tax will cut into their millions of dollars they make off the backs of their sugar-filled addictive substances. Don’t get me wrong, I love an ice cold Coke or Pepsi, but this type of evil-corporation-style misdirection messaging campaign is just repulsive and puts a horrible taste in my mouth that I think won’t easily be washed out by a sugary beverage. VOTE YES on HH.

    • Charles

      The manufacturers aren’t absorbing the cost unless the distributors working in the area force them to lower prices to account for the tax, which they won’t.

      The distributors won’t want to eat the cost themselves, so they’re likely to pass the cost along to their buyers, which are grocery stores.

      So the tax is not _directly_ going to the consumer or grocers, but it will ultimately be passed on to the consumer just as any structural cost would be. The issue is whether the distributors choose to bundle the tax cost into all products they distribute, or simply directly add the cost onto just soda.

      Proponents are hoping/assuming it will be the latter, but they really have no control over it. Any suggestion otherwise is a flat out lie.

      Personally, I think this tax is very arbitrary. There’s tons of added sugar in basically all processed foods. Fruit juices with no added sugar at all are still loaded with sugar. Singling out soda is an attempt to shape a symbolic enemy to blame things on simplistically, without accepting the situation is far more complex than that. Just look at the David vs Goliath narrative being pushed by the pro-HH side.

      These nutritional crusades result in distorted perceptions of food as a whole, where certain things are “good” or “bad” for you. It’s the totality of your diet that creates problems, and not individual contributors. People need to be educated enough to moderate intake, rather than just avoiding specific boogiemen.

      • Bob

        Well, the Soda Manufacturers sure think that the tax will reduce their sales. Otherwise, they wouldn’t spend money trying to defeat the tax.

      • Bob

        Also, it’s worth noting, that the increase in calories derived from simple and close to simple sugars is largely from the increase in sugar water consumption. This ain’t some nanny state thing — the estimated cost of diabetes care is currently over $300 Billion. Assuming just 1% of that is attributable to sugar water — that’s $3 Billion. Given the size of that industry (about $10 Billion), it’s costing everyone else about 30% of its revenue. So there’s a reasonable case to be made that that industry should be taxed very heavily so as not to pass its costs on to the rest of us.

    • Aaron

      Don’t care if big soda is backing this, this WILL raise my grocery bill as I drink alot of juice, and can not afford the expensive kind with no added sugars. This will raise my grocery bill every time I go to the store, and no thank you for that! Now if this bill was to remove all sales tax on all beverages, I could get behind that!

      • Joe

        Aaron — Juice is exempted, so it wouldn’t raise your grocery bill.

        The tax in Berkeley must be getting passed on to beverages only because otherwise there wouldn’t be a reduction in consumption. Right? If soda continued costing the same amount the consumption would stay the same but we are seeing a 20% reduction.

        I’m for the tax, just like cigarettes this is a legal product that has known health risks and we all are covering the costs of those health issues collectively (through higher health insurance costs). It’s only fair to collect revenue from this item to help offset the costs to society.

        • Mickey

          The tax is on juices with added sugars.

          At the end of the day I support the measure. We need to start somewhere to combat the food companies who are selling communities unhealthy food options.

      • Mike

        Aaron – it’s easy, stop drinking juice and fill up your reusable water bottle. Drinking juice regularly (even without added sugar) is not healthy. It’s bad for you teeth, and it’s terrible for your long term health. Take care of your body man. You owe it!

  2. jack stevens

    just another new yorker fleeing california

  3. Staylor

    I agree with making our children healthier but i also feel that by raising the cost of of sugary drinks is not going to stop people from buying them I have be to places and spend $4.00 of a 20oz Pepsi just because I wanted it that bad I just don’t think that’s the solution to make a healthier life for our children I think it’s a money making scam

    • Bob

      The results of the Berkeley Soda Tax disagree with you. And the Soda Co.s know it. That’s why they are spending so heavily against HH — They know it will reduce consumption of their product. Since sugar water consumption is responsible for much of the increase in sugar consumption leading to obesity and diabetes, this is a reasonable tax.

  4. Jamie

    This is one of those instances where your feeling that higher prices will not stop people from buying sugary drinks has already been shown to be off base (sorry to be insensitive, but as Neil deGrasse Tyson says, “The good thing about science is that it’s true whether or not you believe in it.”)

    Taken from the above article:
    “Health officials are calling Berkeley’s tax a win because it resulted in a 21 percent drop in consumers buying sugar-sweetened beverages in Berkeley, while cities without the tax saw an increase in consumption, according to a study published last month in the Journal of American Public Health.”

  5. Belle Johnson

    Where are the parents don’t recall children having an income to buy soda juice gatorade how about the six donut snack it has 39 grams of sugar 1 gram more than a 8oz soda so will donuts be the next tax better yet how about french fries hamburgers so who is really benefiting from this tax. I’m a diabetic and I don’t drink soda how about a nutritional class to educate adults on the effects of too much sugar. Have seen parents buy 16oz sodas for their babies that aren’t walking or talking yet.

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Oakland North welcomes comments from our readers, but we ask users to keep all discussion civil and on-topic. Comments post automatically without review from our staff, but we reserve the right to delete material that is libelous, a personal attack, or spam. We request that commenters consistently use the same login name. Comments from the same user posted under multiple aliases may be deleted. Oakland North assumes no liability for comments posted to the site and no endorsement is implied; commenters are solely responsible for their own content. For concerns about comments posted to this site, please contact us at staff@oaklandnorth.net.

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