Food and beverage tax preemption conflicts between state and local governments

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Ballotpedia's coverage of state and local preemption conflicts

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Last updated: May 6, 2021

On October 4, 2017, the Michigan State Legislature passed a law barring local governments from taxing soda, making it the first state to do so. As of September 2019, four states (Arizona, California, Michigan, and Washington) had passed laws barring local governments from enacting taxes on soda and other sugary drinks. At least one state (Oregon) passed a ban on local sales taxes, which included a ban on local taxation of groceries.

Beverage industry representatives say statewide preemption laws protect consumers and local businesses from higher taxes. Opponents of the policies argue that the tax revenue could fund public services and suggest that the taxes themselves could help prevent health problems like obesity or diabetes.

Ballotpedia covers preemption conflicts between state and local governments in several policy areas. Preemption occurs when law at a higher level of government is used to overrule authority at a lower level. This page summarizes preemption conflicts over tax policy. To learn more about other preemption conflicts, click here.

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Food and beverage tax preemption conflicts overview
Year	State	Summary
2020	California	A lawsuit was filed in California challenging the constitutionality of the state's soda tax preemption law.
2019	Oregon	A veto referendum was introduced that would overturn a prohibition on local governments imposing taxes on grocery sales, but the referendum was not certified.
2018	Arizona	A bill was passed preempting cities and counties from taxing soda, requiring they instead tax all food equally.
2018	California	A law was passed prohibiting cities and counties from implementing a tax on soda and sugar-sweetened drinks through 2030, preempting fees in Berkeley, San Francisco, Oakland, and Albany.
2018	Pennsylvania	The Pennsylvania Supreme Court upheld a Philadelphia tax on soda, finding it did not violate state law.

2020

California: Organizations file lawsuit challenging constitutionality of soda tax preemption law

A lawsuit was filed by Cultiva La Salud, among other organizations, challenging the constitutionality of California's soda tax preemption law. They argued it violated: Article I, § 3; Article II, § 11; Article XI, §§ 3 and 5; and Article XIII, § 25.5 of the California Constitution. The chief executive officer of ChangeLab Solutions, an organization supporting Cultiva La Salud in the suit: "It is imperative that local governments have decision-making power and all tools at their disposal to protect the health and safety of their residents, especially during this time of COVID-19. Abusive laws like this one harm families and communities, and they should have no place in California or anywhere else."

The American Beverage Association said in response to the lawsuit: "We may disagree with some in the public health community on discriminatory taxes, but we agree that we must work on comprehensive solutions to public health challenges. Instead of going to the healthiest cities to propose a tax, we’re going to communities with the highest rates of obesity in the country and working hand-in-hand with community leaders and public health groups to cut sugar consumption.”

2019

Oregon veto referendum introduced to overturn ban on cities and counties taxing food and beverages

See also: Oregon Remove Local Government Authority to Impose Taxes Referendum (2020)

On June 20, 2019, a veto referendum was introduced which would overturn Section 67 of Oregon House Bill 3427. The section in question prohibited cities, counties, and other local governments from imposing taxes on grocery sales. The bill was signed into law by Oregon Governor Kate Brown (D) on May 16, 2019. Supporters of the referendum had until September 28, 2019, to obtain 74,680 valid signatures in order to certify the referendum for the November 3, 2020, ballot. The necessary signatures were not turned in ahead of the September 28, 2019, deadline.

2018

Arizona: Governor signs bill preempting cities and counties from taxing soda

On March 16, 2018, Gov. Doug Ducey (R) signed HB 2484, which preempted cities and counties from taxing soda. It required cities and counties to tax all food equally. HB 2484 passed unanimously in the Arizona State Senate and by a 47-13 vote in the Arizona House of Representatives. At the time of the bill's passage, no municipalities in Arizona had enacted soda taxes.

California: Legislature approves ban on soda taxes in cities and counties

On June 28, 2018, Gov. Jerry Brown (D) signed AB 1838, prohibiting cities and counties from implementing a tax on soda and sugar-sweetened drinks through 2030. The legislation was retroactive to 2018, voiding any soda taxes that went into effect or were set to go into effect that year. It preempted fees on sugar-sweetened drinks in at least four towns and cities in the state, including Berkeley, San Francisco, Oakland, and Albany.

The legislation resulted from a deal between beverage industry representatives and legislators to prevent a ballot measure from being presented to voters in November 2018. The measure would have prohibited local communities from raising taxes without the approval of two-thirds of voters or elected officials.

The beverage industry spent at least $7 million in support of the ballot measure. State senators said industry representatives approached legislators with a deal: approve legislation prohibiting soda taxes and, in exchange, the industry would no longer pursue the ballot measure.

Legislators who voted for the bill expressed discomfort with the decision. Senate President Pro Tem Toni Atkins (D) asked her colleagues to support the bill.

Sen. Scott Wiener (D), who voted against the legislation, said it would hurt local governments and criticized the beverage industry for what he said was forcing the legislature to approve the bill. William Dermody, vice president of the American Beverage Association, disagreed, saying the legislation protected local businesses and consumers from higher taxes.

Pennsylvania: State Supreme Court upholds Philadelphia soda tax

On July 18, 2018, the Pennsylvania Supreme Court upheld a tax on soda in a 4-2 decision that found that Philadelphia's tax did not violate state law. The Supreme Court's decision upheld a ruling by the Pennsylvania Commonwealth Court issued in June 2017. Supreme Court Chief Justice Thomas Saylor wrote in the majority opinion, "The legal incidences of the Philadelphia tax and the commonwealth’s sales and use tax are different and, accordingly, Sterling Act preemption does not apply." Arguments before the court focused on a 1932 state law called the Sterling Act, which allows cities to implement taxes on items that are not already taxed by the state. Opponents of the tax argued that the city violated the law because the soda tax would be passed on to consumers, who already pay the state sales tax. The city argued that the tax was on soda distribution, not sales.

The Philadelphia City Council approved the soda tax by a 13-4 vote on June 16, 2016. The tax, amounting to 1.5 cents per ounce, went into effect on January 1, 2017. Philadelphia became the first city among the nation's 100 largest cities by population to approve a soda tax after months of lobbying by supporters and opponents. Click here for more information.

See also

Local Politics	2021 Election Analysis	Preemption conflicts
Municipal government Local courts School boards Local ballot measures Local recalls	Municipal elections, 2021 Local court elections, 2021 School board elections, 2021 Local ballot measure elections, 2021 Political recall efforts, 2021	Coronavirus • Energy infrastructure Firearms • GMOs • Labor LGBT • Marijuana Plastic bags Police department budgets Ridesharing Sanctuary jurisdictions • Soda taxes

Footnotes