The American Beverage Association has poured a state-record $16.7 million of industry resources into the Initiative 1107 campaign to repeal Washington's temporary two-cent tax on soda pop and a few other new taxes.
The industry’s hardball ad tactics are coming into question, and the vastly outspent opponents say the industry’s barrages of television messages are plainly misleading.
Yes on 1107 campaign spokeswoman Kathryn Stenger has said for months that the initiative would stop taxes recently enacted on “the grocery cart,” which the campaign hammers home incessantly in its flood of ads. The campaign, which has spent $11.8 million, also claims the new sales tax on candy is confusing and arbitrary, because some similar products are treated dissimilarly.
Kevin Keane, senior vice president for public affairs at the American Beverage Association, said in late summer that jobs in the industry are at stake, and that this fight mirrors others the industry has won to repeal taxes in Maine and avoid them in New York, Mississippi, Pennsylvania and other areas.
“Taxing anything in the grocery cart, especially in this economy, especially when it’s just going to pay for more government, is a line we believe consumers don’t want to cross,’’ Keane said.
Cassie Saur of the Washington State Hospital Association, which wants to retain the taxes to pay for health programs, told The Olympian’s editorial board last month that the infusion of cash is distorting the electoral process.
“It is not a citizen initiative, absolutely. It’s completely contrary to what a citizen initiative is supposed to be,” she said.
And Celia Schorr, spokeswoman for No on 1107, says the industry is making Washington an example in its bid to turn back taxes on soda pop in other states.
“They are worried about sending a message to other states. Basically it’s a warning shot: Don’t try this. If you adopt a soda tax in your state, this is what we’ll do to you,” Schorr said Friday. “It’s a sad state of affairs when a huge corporate interest can come into a state and basically wave their checkbook around and scare everybody.”
I-1107 would repeal several tax changes adopted by the Democrat-controlled Legislature this year: new temporary taxes on bottled water and soda, a permanent sales tax on candy, and a permanent change in the business and occupations tax on certain food processors that make products that contain processed meat.
The targeted taxes are worth about $107 million the first of three years, and the temporary tariffs on pop and water expire in mid-2013 – unless lawmakers vote to continue them.
With less than two weeks until the Nov. 2 deadline to postmark ballots, I-1107 appears to have strong public support. The KCTS-9/KPLU/Washington Poll of 500 voters earlier in October showed it passing 56 percent to 36 percent, with a 4.3 percent error margin.
No on 1107 activists are fighting back with less money – even enacting a “Soda Challenge” contest that asks their supporters to submit videos making fun of the American Beverage Association’s costly campaign. The contest will pay $1,107 to the creator of the winning video.
State lawmakers who sponsored the taxes have said the new tariffs on water, pop and candy fall on optional purchases that hard-up consumers can avoid. And Democratic Rep. Ross Hunter, who helped write the tax package, says the Yes on 1107 ads are “deceptive” in linking the issue to groceries or food.
“Don’t be confused. This is about pop. They are the people who are paying for this initiative. They paid to put it on the ballot, and they are the people who want to repeal it,” he said.
Hunter said he had expected a $10 million campaign, but not the more than $16.7 million raised so far – virtually all of it from the soda industry based in Washington, D.C. Just 11 other cash donors are listed in reports to the state Public Disclosure Commission, although local bottler Harbor Pacific in Elma has given time and other in-kind donations worth more than $12,000 and other bottlers also have helped.
Apart from the groceries argument, the initiative is pitting those who think state lawmakers needed to raise funds to stave off deeper cuts to health care and education programs against those who think jobs are on the line – or who think spending cuts are preferable.
Among those speaking out for 1107 are Washington-based bottlers such as L&E Bottling in Tumwater and Harbor Pacific Bottling in Elma. The bottlers have concerns about job cuts resulting from the effect on their sales if they try to pass on costs to consumers.
Tim Martin, president of Harbor Pacific and the Washington Beverage Association, disputed the idea that the initiative is not a Washington effort – and he insisted that taxes on products such as soda pop are a tax on groceries.
He said Harbor Pacific and bottlers such as L&E Bottling Co. pay dues to the national soda group and that the members help each other out in other states.
Martin appears on television ads and told The Olympian’s editorial board that his company is leaving five staff positions vacant because of the $350,000 a year in revenue his company loses due to the tax.
Brian Charneski, president of the L&E Bottling plant that handles Pepsi products, said the $10 million tax exemption written into the tax law helped one of his Pepsi competitors defer price increases for a few months, while he had to raise his prices July 1.
Martin said the tax exemption ended up helping out-of-state bottlers and large in-state operations. The ones that benefited were able to define themselves as manufacturers, which L&E could not.
“Coalition members feel this is the camel’s nose under the tent” to taxing sweetened drinks, Charneski said.
Even one important backer of the tax package – House Speaker Frank Chopp – had concerns about the soda tax. He asked Gov. Chris Gregoire to veto the soda tax portion of the nearly $800 million in new revenues adopted.
Chopp had concerns that the $10 million tax exemption did not work for small bottlers. He also worried that a costly campaign to overturn the soda tax could wipe out the other taxes needed for health care and schools.
Gregoire rejected the veto because she said the tax package was a “go-home” agreement linked to the budget. But she said she was open to revisiting the exemption issue next year.
Brad Shannon: 360-753-1688 email@example.com www.theolympian.com/politicsblog