The latest bill, AB 2782 (Bloom; D-Santa Monica), threatens jobs in the beverage, retail and restaurant industries by arbitrarily and unfairly targeting certain beverages for a new tax in order to fund health programs.
Jobs at Risk
To the extent AB 2782 has its intended effect of reducing consumption, employers engaged in the production, distribution, retail, and restaurant industry will have to mitigate that loss through reduction of costs in other areas, including labor.
The bill seeks to charge a $0.02 excise tax on each fluid ounce of a bottled sweetened beverage and a $0.02 excise tax on each fluid ounce produced from a concentrate from which a sweetened beverage is derived.
Although the bill describes the amounts collected as a “health impact fee,” the revenues are a tax that would be used to fund the Healthy California Fund. That fund provides various departments with the authority to invest in prevention programs and activities to address diabetes, obesity, heart disease, and dental disease.
As CalChamber’s opposition letter explains: “imposing a targeted tax on one industry to address a statewide problem that is created due to numerous different issues unrelated to sweetened beverages, will have significant consequences.”
The letter points out that the targeted tax will certainly be passed on to consumers through higher prices.
Another concern is the creation of additional state programs that may ultimately rely on General Fund revenue in order to survive. If, as intended, AB 2782 deters consumers from buying sweetened beverages, the excise tax will be a decreasing revenue source and there could be more pressure to use the General Fund to replace the funding for the programs the bill creates.
The business community consistently maintains that if a tax is necessary, it should be only temporary and broad-based so that the impact is minimized as the tax burden is shared by all instead of an individual business or industry.
AB 2782 awaits action in the Assembly Health Committee. The CalChamber is urging members to contact their Assembly representatives and members of Assembly Health to ask them to oppose AB 2782.
An easy-to-edit sample letter is available at www.calchambervotes.com.