Taxes And Warning Labels On Drinks Stall, Under Pressure From Industry

The California restaurant and beverage industries have successfully opposed two high-profile bills in the state Legislature this month. The bills would have added warning labels to sodas and taxes to hard liquor.

The hard liquor tax—$1.20/gallon—would have helped pay the cost of removing another tax, the sales tax on diapers and tampons. Democratic Assemblywoman Lorena Gonzalez Fletcher authored the bill.

"The basic unfairness is that these products are necessities in life.," says Gonzalez. "There’s no way you can get through life without diapers or without feminine hygiene products, and so they shouldn’t be taxed. Alcohol on the other hand, hard alcohol, is a luxury item."

Another bill would have added cigarette or alcohol-style warning labels to sodas and other sugary drinks, which doctors and health advocates have linked to obesity. Both bills drew opposition from industry groups and stalled in committee. Matt Sutton is with the California Restaurant Association.

These two issues would just create more things that restauranteurs need to do, and right now I think they’re very challenged with all of the cost increases that they’re trying to find a way to deal with," says Sutton.

The diapers bill could come back up this year, although Gonzalez Fletcher says it likely won’t include the liquor tax.

We have to continue to try to find a revenue source, and the fact is that our initial tax code was written probably by a bunch of men," says Gonzalez. "And so, things that were left out, maybe women care about a little bit more. So, maybe we’ll go after something like, Viagra, which is tax-free."

Governor Jerry Brown vetoed a version of her bill last year, because it did not include a way to pay for lost sales tax revenue.