The California Grocers Association, American Beverage Association, California Chamber of Commerce and three other trade associations filed suit May 28 challenging the legality of Santa Cruz’s Measure Z, a soda tax that was narrowly approved by voters in November.
The tax of 2 cents per fluid ounce on distributors of most sugar-sweetened beverages, approved with 52.3 percent of the vote, violates the state’s ban on local soda taxes, as well as the Bradley-Burns Uniform Local Sales and Use Tax Law and the state constitution’s ban on “snack taxes,” which specifically includes non-carbonated beverages, the suit argues.
In 2018, the Legislature and governor approved the Affordable Groceries Act, which prohibits the imposition, increase, levy, collection, or enforcement by a local agency or its electorate of any new tax, fee, or other assessment on groceries, including the beverages taxed by Measure Z. The Affordable Groceries Act sunsets January 1, 2031.
“The Affordable Groceries Act contains a clear and express statement of preemption of local tax authority,” the suit notes. “Affordable Groceries Act section 7284.9, subdivision (a) provides that ‘[i]t is the intent of the Legislature to regulate the imposition and collection of taxes and other charges on groceries comprehensively and to occupy the field to the exclusion of local action except as specifically provided in this chapter.’ Affordable Groceries Act section 7284.9, subdivision (b) further provides that ‘the promotion of uniformity in the taxation of groceries is a matter of statewide concern and, therefore, is not a municipal affair as that term is used in section 5 of article XI of the California Constitution.’”
The state “has long exercised its political power to ameliorate the high cost of groceries and other basic necessities, including through enacting uniform statewide tax policies,” the suit states.
“These tax exemptions for key necessities promote affordability and uniformity for both consumers and retailers,” the suit continues. “By prohibiting local sales and use taxes on such products, the State ensures that basic goods will be consistently taxed across the State and that citizens of particular municipalities will not be disadvantaged.”
The suit includes quotes from proponents of the measure who acknowledged during Santa Cruz City Council meetings that Measure Z would defy state law. Additionally, the suit references proponents’ arguments that the tax was not intended to raise revenue, but rather to reduce the consumption of sweetened beverages.
“Proponent statements related to Measure Z underscore that the Beverage Tax is not tied to municipal concerns, as proponents recognize the intent of the tax is not to raise revenues for the City, but to impose a public health policy,” the suit argues. “Such subjects are also the purview of the State.”
A large portion of the suit is dedicated to chronicling the high cost of groceries in California and various state policies that are intended to make groceries more affordable for residents.
The suit was filed in Sacramento County Superior Court, which has initial jurisdiction to issue orders to enforce the Affordable Groceries Act.
Politico reported that Measure Z, the first local soda tax approved since the statewide ban, “was drafted in part to initiate a legal challenge that would strike down the ban.”