Business vs. Taxpayer Groups and the Soda Tax

You would think that large taxpayer advocacy groups would rush to oppose a tax on soda as proposed by a couple of California cities. Success with these taxes could ignite a trend of targeting taxes on products. However, that may not be the case this year because of the many tax measures that on California ballots and the positions taken on those measures by members of the business community.

The possibility of taxpayer groups abandoning efforts to stop business-related tax increases could spell trouble for business.

The soda tax increases on the November ballot in Richmond in Northern California and El Monte in Southern California would tax businesses one-cent-per-ounce on sales of sugary drinks. Supporters argue it’s a way to cut down on obesity under the theory the more you tax something the less you have of it.

Leading the charge against this tax is the American Beverage Association. According to one report, the campaign in Richmond has already spent more than $350,000

But, the American Beverage Association is active on another tax front as well. The association has donated $250,000 to help pass Proposition 30 to raise $50-billion in state sales and income taxes over the next seven years.

Taxpayer groups opposed to Prop 30 may not be so eager to help corporate donors supporting Prop 30 to stop taxes on specific products.

The ABA donation is probably similar to other donations made by corporations as an act of self-preservation, to wit: ‘we’ll support a tax on someone else, governor, if you don’t advocate a tax on us.’

This divide and conquer approach is what the governor’s campaign team is looking for. In the long run it could be disastrous to both the business community and to taxpayers at large. The focus on Divide and Conquer is on the latter for once conquered tax rates would likely go up for both business interests and individual taxpayers in the long run.

When I ran the Howard Jarvis Taxpayers Association and the late Larry McCarthy was president of CalTax, the business oriented taxpayers association, we use to agree that if the business community and the grassroots taxpayer community could stick together on tax policy, it would result in a powerful force against an ever tax-hungry governments.

However, if the groups were split asunder havoc would result for taxpayers. That theory may well be tested during this coming election season.

(Joel Fox is the Editor of Fox & Hounds and President of the Small Business Action Committee. Originally posted on Fox & Hounds.)