ELECTION UPDATE: Initiative 1634 APPROVED!

Much of the statewide interest was focused on initiatives. Initiative 1634, which would block Washington cities from enacting new food and beverage taxes, has comfortably passed with support from 54.8% of voters.

BACKGROUND
On November 6, 2018, voters in Washington State will be asked to weigh in on Initiative 1634. I-1634 will 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 will 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, non-alcoholic beverages, spices, and condiments, among other things. Covered groceries do not include alcoholic beverages, marijuana products, or tobacco.

According to Rebecca Glasgow, Deputy Solicitor General for the State of Washington, “I-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 classifications related to groceries.” She goes on to say, “I-1634 would not restrict local governments’ existing authority to impose other taxes on transactions involving non-grocery items.”

A yes vote supports the ballot initiative to prohibit local governments from enacting or increasing taxes on food products and beverages.

A no vote opposes the ballot initiative, which would allow the possibility for local governments to impose discriminatory taxes on food products and beverages.

While the ballot measure would restrict future local taxing authority on food products and beverages, it would not apply to existing discriminatory food taxes such as Seattle’s tax on soda distribution. The Seattle soda tax was imposed as a “privilege tax” on the distribution of food products in June of 2017. I-1634 would eliminate the privilege tax loophole on all food and beverage for human consumption, except those exempted.

Opponents of I-1634, argue that State law already precludes taxes on groceries. They point out that I-1634 is funded by the soda and grocery industry to take away local choices from our cities and towns. They say this confusing measure reduces local options while increasing state control at a time when we are struggling to fund important community programs. They call it a blatant corporate power grab.

Proponents of I-1634 argue that local governments across Washington are looking to raise revenues and one idea being considered is new taxes on food and beverages. They argue that taxes on food and beverages negatively impact low income and working families the hardest. They say these taxes, if enacted will have a negative impact on local businesses in retail, manufacturing, transportation and the economy, including job losses.

 

WBA POSITION

The Whatcom Business Alliance (WBA) agrees with the opponents that I-1634 would take choices away from local elected officials regarding their ability to tax grocery items. We believe local governments should be able to manage their budgets without putting a burden on lower income people and the community at large. The WBA also understands the yes campaign on this Initiative is strongly supported and funded by the beverage and food industry. That makes sense. Their respective businesses would be greatly harmed by targeted, discriminatory taxes on their products. There are also a number of other business

organizations such as Chambers of Commerce, Farming, Agriculture and Cattlemen’s associations and unions that are supporting the initiative. In addition, hundreds of small businesses including restaurants, cafes, coffee shops, convenient stores, grocery stores, theatres, gas stations and more have added their names in support of the initiative. The WBA understands and shares their support for I-1634 for the following reasons:

1. Taxes on soda drinks and food items are extraordinarily regressive. They would disproportionately impact low income families in our communities.
2. Elected officials should be able to manage their budgets without creating new taxes on food and beverage.
3. There is clearly a movement from local governments to tax sugared beverages. It’s already passed in Berkley, Philadelphia, San Francisco, Oakland, Albany, Boulder, Cook County, Illinois and Seattle. If enacted, initiative 1634 would ban this potential tax as well as other discriminatory food taxes on a local level.
4. Initiative 1634 would not prohibit possible discriminatory food taxes at the state level. It is worth noting that Washington voters have adopted ballot measures to repeal taxes on food items on two occasions.
5. The tax imposed on certain businesses based on location would create a competitive price advantage for businesses located outside the taxing district.
6. People interested in purchasing food or beverages subject to a specific local tax would likely choose to simply shop at a store outside of city limits that is not subject to the tax.
7. Initiative 1634 is not the first of its kind. Bans on local food and beverage taxes have been enacted in California, Arizona, Michigan and one is currently being considered by voters in Oregon.
8. According to the Washington Policy Center, under I-1634 local government officials would retain the authority to impose broad-based taxes and fees on grocery items, as long as the tax rates are applied equally to non-grocery items.

For these reasons why the Whatcom Business Alliance SUPPORTS Initiative 1634, which will prohibit enacting or increasing discriminatory taxes on food products and beverages.

The deadline to register to vote online is Monday, October 8

CLICK HERE TO REGISTER TO VOTE

Whether you agree with the WBA position or not, we strongly urge you to vote in all elections. If you are not currently registered, you can do it very simply online. The deadline for online voter registration is Monday, Oct. 8th or you may register in-person until 4:30 p.m., Monday, October 29, at the Whatcom County Auditor’s Office, Whatcom County Courthouse, 311 Grand Ave., Suite 103, Bellingham. Click the link below to register to vote online. Election Day is Nov. 6th.