What is I-1634?
I-1634 is a statewide ballot measure that will appear before Washington State voters at the November 2018 general election. It is a proposed law funded by the soft drink industry (Coca-Cola, Pepsi, Dr Pepper Snapple Group, and Red Bull). The measure seeks to prohibit local communities from raising money for public health services by levying taxes on sugary beverages like soda, but it would allow the state’s largest city, Seattle, to keep its existing sugary beverage tax. Essentially, what the soda companies want to do is deny every other community the freedom to raise money for public health by taxing sugary beverages, and prevent Seattle from ever raising its tax. They’re spending millions to convince Washingtonians to pass their self-serving scheme.
What would I-1634 do?
The following is the explanatory statement for Initiative 1634 prepared by the Attorney General’s office.
The Law as It Presently Exists
All local taxation must be authorized by state law. Current state law gives broad taxing authority to counties, cities, and towns. The Washington Supreme Court has recognized that cities’ and towns’ taxing authority includes the authority to tax retailers for the privilege of conducting a specific type of retail business within the city. Counties and cities also have authority to impose sales and use taxes within certain limits that the Legislature has set. For example, local sales or use taxes can be imposed only when the state sales or use tax is also due on a sale or item.
Local governments like cities and counties have relied on this broad local taxing authority to impose taxes related to specific products. For example, in 2017 the City of Seattle adopted an ordinance imposing a privilege tax on the distribution of sweetened beverages like soda within the city limits. The City of Seattle’s tax is calculated based on the volume of sweetened beverages or concentrate distributed in the city.
The State has imposed state sales and use taxes on the retail sale of most items, but food and food ingredients are generally exempt from these state taxes. Nevertheless, state sales and use taxes are imposed on prepared food, alcoholic beverages, bottled water, and soft drinks. There are also additional state taxes on alcoholic beverages, cigarettes, tobacco products, and marijuana products.
The Effect of the Proposed Measure if Approved
If adopted, Initiative 1634 would prevent local governments from imposing or collecting any new tax, fee, or other assessment on certain grocery items after January 15, 2018. This restriction would prohibit any new local tax, fee, or assessment of any kind on the manufacture, distribution, sale, possession, ownership, transfer, transportation, container, use, or consumption of certain groceries. Initiative 1634 would also prohibit any increase of existing local taxes, fees, or assessments on these grocery items after January 15, 2018.
Local governments covered by this initiative are counties, cities, and towns, as well as other municipal corporations and local taxing districts. Covered grocery items would include any raw or processed food or beverage, or any ingredient, intended for human consumption. This would include, for example, meat, produce, grains, dairy products, nonalcoholic beverages, spices, and condiments, among other things. Covered groceries do not include alcoholic beverages, marijuana products, or tobacco.
Initiative 1634 would not prevent the State from imposing new taxes on groceries. It would not prevent local governments from imposing or collecting a new tax, fee, or assessment that is generally applicable to a broad range of businesses and business activity, so long as it does not impose a higher tax rate on groceries or impose a higher tax rate based on a classification related to groceries. Initiative 1634 would not prohibit a local tax, fee, or assessment on alcoholic beverages, marijuana products, or tobacco. Initiative 1634 would not restrict counties’ and cities’ existing authority to impose local sales and use taxes. Initiative 1634 would not restrict local governments’ existing authority to impose other taxes on transactions involving non-grocery items.
Why vote no on I-1634?
The following is the text of the voter’s pamphlet statement submitted to the Washington Secretary of State in opposition to Initiative 1634.
Initiative 1634 takes away local control and gives it to the state
This confusing measure imposes a one-size-fits-all state law that takes power away from voters and hands it to the state, silencing our voice in local decision-making. Different communities have unique needs and local voters deserve a say in how revenue decisions are made. This initiative is a slippery slope toward greater state control at the expense of our cities, towns, and local communities.
Corporate special interests are spending millions to strip away voter choices and protect profits
I-1634 has nothing to do with keeping our food affordable. In fact, tax prohibitions on everyday food items — from fruits and vegetables to milk and bread—are already reflected in voter approved state law. Instead, this measure is funded almost exclusively by the multi-billion-dollar soda industry. They are only concerned with their profits and are spending millions on this initiative—and misleading advertisements—that would undermine local control.
Reject Initiative 1634 to prevent future erosion of local powers by special interests
I-1634 sets a dangerous precedent — any special interest could spend millions on a misleading initiative to limit our rights as voters and our local autonomy. Voting no sends a clear message that we value local control and will not be fooled by the political agenda of wealthy industries or outside groups.
Rebuttal of Argument For
State law already precludes taxes on groceries. Initiative 1634 is funded by the soda industry to take away local choices from our cities and towns. This confusing measure reduces local options while increasing state control at a time when we are struggling to fund important community programs. Stand with doctors, teachers and community advocates in saying no to this blatant corporate power grab.
Statement Prepared By
Mary Ann Bauman, MD, American Heart Association; Kate Burke, Spokane City Council; Jill Mangaliman, Got Green; Jim Krieger, MD, MPH Healthy Food America; Val Thomas- Matson, Healthy King County Coalition; Carolyn Conner, Nutrition First
I-1634’s fiscal impacts
The following is the fiscal impact statement for I-1634 prepared by the Office of Financial Management (OFM).
FISCAL IMPACT SUMMARY
Initiative 1634 prohibits new or increased local taxes, fees or assessments on raw or processed foods, beverages or their ingredients, intended for human consumption except alcoholic beverages, marijuana products and tobacco, unless they are generally applicable and meet specified requirements. The initiative allows local government to continue to collect revenue if the ordinance was in effect by Jan.15, 2018. The revenue and expenditure impacts cannot be determined because the potential lost revenue is based on volume of product sold within the jurisdiction.
GENERAL ASSUMPTIONS
- The effective date of the initiative is Dec. 6, 2018.
- The provisions of the initiative apply to taxes, fees or other assessments on groceries applied after Jan. 15, 2018.
- Estimates use the state’s fiscal year of July 1 through June 30. Fiscal year 2019 is July 1, 2018, to June 30, 2019.
REVENUE
Local revenue impacts
The initiative has an indeterminate impact on local revenue. It would prohibit imposing or collecting any new tax or fee, or making an inflationary adjustment on taxes or fees on certain grocery items after Jan. 15, 2018.
The city of Seattle enacted a sweetened beverage privilege tax prior to the effective date of the initiative. Seattle estimates the tax will generate $23.378 million per year. Since the imposition of the tax was started before Jan. 15, 2018, the tax will remain in effect. However, the city of Seattle would not be able to adjust the tax by inflation.
State revenue impacts assumptions and description
The initiative would not have a state revenue impact because it does not apply to state taxes, fees or other assessments.
EXPENDITURES
Local government expenditures
The initiative would not have an expenditure impact on local governments because it prevents the future imposition of local taxes or fees on groceries after Jan. 15, 2018.
State government expenditures
The initiative would not have an expenditure impact on state government because it does not apply to state taxes, fees or other assessments.