The Journal’s View: Initiative 1634 deserves support
-August 30th, 2018
Washington state voters should back Initiative 1634 prohibiting local governments from taxing groceries, in an effort to prevent measures like the city of Seattle’s sugary beverage tax from becoming commonplace.
I-1634 is marketed as an affordable groceries measure, one that aims to keep local governments from placing special taxes on food and drinks and shifting greater cost burdens to consumers in the name of new revenue streams. The state wisely doesn’t charge sales tax on grocery items, but municipalities can levy their own taxes on such items. Proponents say that if passed, I-1634 would close that loophole—while still allowing taxes on alcohol, tobacco, and marijuana. Local governments wouldn’t be able to do what Seattle has done.
And what, precisely, is it that Seattle did? Its City Council placed a 1.75 cent-an-ounce tax on sugary beverages, the definition of which is more complex than one might think: some juices count, but many syrup-laden coffee drinks don’t. Costco might sell 35 16.9-ounce bottles of Gatorade in Spokane for $15.99, but in Seattle, it would cost an additional $10.35 because of the tax.
Gatorade might not be the first thing to come to mind when thinking of groceries, and by extension, a tax on sugary sodas might not be an undue burden on families living paycheck to paycheck. Indeed, I-1634’s detractors refer to measure as a thinly veiled effort by “Big Soda” to stave off more taxes.
We wouldn’t dismiss the grocery affordability argument out of hand like that. But even if you don’t buy it, there are logical business reasons for backing I-1634.
From a business community perspective, the biggest factor in backing the initiative is removing the potential for inconsistency from one city to another—and the undue logistical and administrative burdens such inconsistencies create.
Food distributors, beverage distributors, restaurants, grocery stores, and other retailers that carry food typically operate in a number of cities. For example, Rosauers Supermarkets, a small chain by industry standards, has stores in eight different cities in Washington state, and additional, varied taxes in those cities would be a tracking nightmare for such a company.
If taxes such as the one Seattle levied became more pervasive, it would add to the cost of doing business and have the potential to increase the cost of goods beyond that of the individual taxes themselves. Indeed, proponents of I-1634 say that’s precisely what has happened in Seattle.
While the state shouldn’t tax groceries, including sugary drinks, a statewide measure would be more palatable than a patchwork approach that could occur if such taxes spread city by city. Once again, that’s not something we want to see.
I-1634 has broad-based support from Spokane business groups. Greater Spokane Incorporated and the Greater Spokane Valley Chamber of Commerce have put their names behind it, as has Better Spokane, an organization focused on business issues and economic development.
Now is the time to nip local taxes on groceries in the bud before they become widespread.