New Tax Targeting Sweetened Beverages Threatens Jobs


A proposal targeting certain beverages for a new tax is the newest addition to the California Chamber of Commerce “job killer” list.

AB 1357 (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 children’s health programs.

AB 1357 is set for hearing in the Assembly Health Committee on May 12.

Tax, Not a Fee

Despite its description as a “health impact fee,” AB 1357 actually seeks to impose 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.

The revenue from this tax would be used to fund the Children and Family Health Promotion Trust, which would provide state agencies with the authority to issue grants to county governments, nonprofits and other community organizations to invest in childhood obesity and diabetes prevention, as well as oral health.

Given that the recipients of the benefit from this revenue would be beyond just those that actually pay the “fee” and that the “fee” does not fall within any of the other listed exceptions under the California Constitution, it is a tax.

Higher Prices/Job Loss

This targeted tax will certainly be passed on to consumers through higher prices. As a result of the passage of Proposition 30, California now has the highest sales and use tax rate in the nation at 7.5%, as well as the highest personal income tax bracket at 13.3%. AB 1357 will only contribute to the overall costs of living in this state.

Moreover, given that the intended effect of AB 1357 is to deter consumers from purchasing such beverages or concentrates, it will have a direct impact on the beverage industry and its employees. This proposed tax will force these businesses to adjust for their losses, including potential reductions in their workforce.

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.

New Revenue Pressure

As set forth above, AB 1357 would create a new fund from the excise tax in order to educate, prevent and improve childhood obesity as well as dental health.

The CalChamber appreciates the effort to address this health issue, but is concerned by the creation of additional state programs that ultimately may rely upon General Fund revenue in order to survive.

If AB 1357 deters consumers from purchasing sweetened beverages, as intended, then the excise tax is a decreasing revenue source. The programs AB 1357 creates will experience a loss of funding, thereby potentially placing more pressure on the General Fund to replace this declining revenue.

California has struggled with budget cuts and revenue loss. Although the passage of Proposition 30 has provided relief, there is not necessarily additional revenue to support more programs.

Action Needed

The CalChamber is urging members to contact their Assembly representatives to ask them to oppose AB 1357.

An easy-to-edit sample letter is available at

Staff Contact: Jennifer Barrera