After his campaigns to impose soda taxes in Philadelphia and Cook County, which encompasses Chicago, former New York City Mayor Michael Bloomberg is now using his billions to bankroll a campaign for another regressive tax hike on soda, this time in Multnomah County, Ore., home to the state’s largest city: Portland.
Signature gathering recently began to qualify a measure for the ballot asking Multnomah County voters to approve 1.5 cent per ounce local soda tax. 17,381 signatures must be collected by November in order for the tax increase to be placed on the May 2018 ballot. If enacted, the proposed soda tax would add $2.18 to the cost of a twelve pack of soda and raise the price of every two-liter by more than $1.00, regardless of retail price.
The organization heading up the campaign for this soda tax has dubbed itself the “Coalition for Healthy Kids and Education.” Yet, as Felicia Heaton, spokeswoman for Move Multnomah Forward, a group opposing the soda tax, points out, “there is absolutely no guarantee in the measure that the revenues will go to help kids and schools.”
“This tax will hurt small businesses like food carts and neighborhood grocery stores, and especially middle-class and low-income families,” Heaton added. “It will require a whole new government bureaucracy to collect and administer the tax…Multnomah County voters should reject this tax that targets working class people—their wallets, their jobs, their businesses.”
Michael Bloomberg and other soda tax proponents are seeking to impose a far heavier tax burden on soft drinks than on alcoholic beverages in Multnomah County. The state of Oregon places an 8-cent tax on every gallon of beer and a 6.7-cent tax on every gallon of wine. If enacted, the proposed Multnomah County soda tax would impose a $1.92 tax on every gallon of soda, which is 24 times greater than the state excise tax on beer and three times the state tax on wine.
Oregon isn’t the only place where Bloomberg is using his fortune to lobby for punitive taxation of soft drinks. Bloomberg is dumping $5 million on an ad campaign in Cook County, Ill. that responds to the public backlash against the new county-wide soda tax.
Cook County is now the largest municipality in the U.S. to levy a soda tax. The new one-cent per ounce soda tax, which went into effect in August, required a rare tie-breaking vote from Cook County Board President Toni Preckwinkle, the top champion of that regressive tax hike, in order to receive final passage back in November of 2016.
The massive price spike on soft drinks caused by the soda tax, which disproportionately hits low and middle-income households who can least afford it, has engendered outrage among Cook County residents. The tax is so unpopular that Illinois state lawmakers have introduced preemption legislation that would repeal the Cook County soda tax and prohibit the implementation of soda taxes in other cities, towns, and counties. A bipartisan group of Cook County commissioners has introduced an ordinance that would repeal the tax. A vote is expected on that in October.
Mary Werner, President of Worth Village, which is located in Cook County, explains how the soda tax is pushing commerce outside the county borders:
“It would be bad enough if they were only buying their beverages, but they are so mad and they are so angry and they are so fed up with the taxes in Cook County, they are doing all their shopping, and while they’re there, they’re buying their gas as well,” Werner said.
In neighboring Iowa, Gov. Terry Branstad (R) signed a bill into law earlier this year that prohibits locally imposed soda taxes. More governors and legislators across the country are realizing that statewide preemption legislation, as a bipartisan coalition in Illinois has discovered, is needed to protect their constituents from local soda taxes and other municipal cash grabs.
Philly Proves Soda Taxes Harm Business, Delay Needed Reforms, and Serve as Place-Holders for Future Tax Hikes on the Broader Populace
The City of Brotherly Love provides another cautionary tale for Multnomah County votes. Philadelphia made national headlines when the soda tax championed by Mayor Jim Kenney went into effect on the first day of 2017. Like the Cook County pop tax, the Philly soda tax also applies to sugar-free diet soft drinks. As with the soda tax in Cook County, the 1.5 cent per ounce Philly soda tax, despite what proponents claim, has nothing to do with improving health. It’s all about the money. Unlike many soda tax proponents, Mayor Kenney at least deserves credit for admitting that his effort is a pure cash grab.
Michael Bloomberg has spent approximately $1 million on an ad currently running in the Philadelphia media market touting the Philly soda tax and its alleged benefits. Here Bloomberg is using his deep pockets to mislead the public about the massive tax increase their mayor just hit them with.
In the ad, Bloomberg calls the Philly soft drink levy a “small soda tax.” Yet there is nothing small about the Philly soda tax, which has made the effective tax rate on Gatorade higher than the tax rate on a can of beer in the city of Philadelphia, according to the non-partisan Tax Foundation.
Philadelphia’s experience with its soda tax thus far provides a cautionary tale for Multnomah County voters and other jurisdictions contemplating this Pigovian levy. From January, when the Philly soda tax went into effect, through mid-April of this year, grocery store beverage sales (excluding milk) in Philadelphia are down 28% compared to the same period last year, according to same-store data from IRI, a market research firm. Meanwhile, beverage sales rose 13% at stores located outside of Philadelphia, but within five miles of city limits, suggesting that shoppers are taking their business to grocers not forced to apply Philly’s special tax on soft drinks.
In addition to hurting mom & pop stores in Philadelphia, Mayor Kenney’s soda tax is failing to meet revenue projections. In its first six months on the books, Philly soda tax collections fell short of projections by 15%. Amazingly, Mayor Kenney’s office called that “a win.” Philadelphia’s experience is the latest example of why it’s a bad idea to balance a budget by raising taxes on a declining source of revenue.
In addition to making the enjoyment of one of life’s simple pleasures unaffordable for low and middle-income households, soda taxes reduce the income and job-creating capacity of small businesses. Cook County businesses, like those in Philly, have also already seen a drop in sales following the implementation of the soda tax there, with some retailers experiencing as much as a 39% reduction in sales.
The Cook County Board of Commissioners will vote on the soda tax repeal ordinance next month. Bloomberg has promised to use his money to defend commissioners who supported the tax, while others are moving forward with campaigns to unseat commissioners who supported this regressive and incredibly unpopular tax.
“When Cook County and President Preckwinkle desperately need New York City billionaire Michael Bloomberg and his $5 million to try and whitewash a tax nearly 90% of Cook County residents have rejected, it’s clearly time to repeal the beverage tax,” read a statement issued by Can the Tax, a coalition pushing for repeal of the Cook County soda tax.
Smoking rates have declined over the years, as has soda consumption. Most view those trends as a positive development. However, raising taxes on those products, as we have seen in Philadelphia and now Cook County, further depresses already declining consumption and pushes sales to lower tax jurisdictions. This in turn precipitates a revenue shortfall like that which has occurred with the Philly soda tax. This is why new soda taxes, like other taxes on declining sources of revenue, merely serve as placeholders for future tax hikes on the broader populace.
The two most high-profile soda taxes, Cook County’s and Philadelphia’s, were enacted by elected officials. However, as Santa Fe proved earlier this year, voters, even those in left-leaning cities and regardless how much campaign cash Bloomberg sends from Manhattan, will reject soda taxes if given a choice.
A measure to impose a local soda tax in Santa Fe, NM appeared on a May 2nd special election ballot and was rejected by voters with over 58% voting against the new tax. That measure, had it passed, would’ve enacted a 2-cent-per-ounce tax on soda and sweetened beverages. The measure in Santa Fe was asking voters to approve an excise tax on soda that would’ve been six times greater than the one New Mexico assesses on beer. Even in a left-leaning city, that didn’t sound like a good idea to most Santa Fe voters.
It’s worth noting that more than 70% of Santa Fe voters cast their ballot for Hillary Clinton last year, yet they shunned the same type of soda tax that Clinton endorsed on the 2016 campaign trail. It’s also worth noting that the soda tax ballot measure received its highest level of support in the most affluent parts of Santa Fe, while voters living in lower-income and predominantly Hispanic neighborhoods overwhelmingly voted down this regressive tax. The outcome in Santa Fe provides hope for Multnomah County, proving that even the most liberal electorates can see through Bloomberg’s well-funded misinformation campaign.
It’s clear that President Donald Trump has riled up many on the Left who still can’t come to grips with the fact that he upset Hillary Clinton last year and now lives in the White House. Yet if progressive Portlandia voters want to stick it to a Manhattan billionaire who is pushing his harmful agenda on an unwilling country, they can forget about Trump and focus on defeating Michael Bloomberg’s push for a regressive tax hike in their own backyard.
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