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California: Attack of the Snack Tax

  • Mar 31, 2016 | Gail Cole

 Should snack foods be taxed in California?

A number of California lawmakers are seeking to amend the state constitution in order to impose sales and use tax on a bevy of snack foods. Can they succeed?

Snack tax look-back

For a brief time in the early 1990s, snack foods like candy and chips were subject to California sales tax. The short-lived tax on snacks was part of a plan to balance the state budget, but it was unpopular from the outset among both consumers and retailers. Consumers didn’t like paying more for their snacks. Retailers, with lists of thousands of exempt and taxable products in hand, found compliance cumbersome. A Harvard study calls “California’s Inadministrable Snack Tax” “a disastrous effort.”

In 1992, Proposition 163 amended the state constitution to prohibit sate and local governments from taxing certain food products and specifically exempt bottled water, candy, and snack foods from sales and use tax. They remain exempt food products today.

Why tax snacks?

Democratic Assembly member Cristina Garcia has announced her intention to introduce an Assembly Constitutional Amendment (ACA) “to reinstitute the charging of sales tax on candy and snack food, to create a funding stream to combat health disorders caused by the unhealthy diets of processed snack foods in California.”

Her motivation stems from a desire to combat obesity and the health problems caused by high fat, high sugar foods. She quotes alarming statistics from a UCLA study:

  • 55% of California adults have diabetes
  • 33% of California young adults are pre-diabetic

Whether or not a tax on processed snack foods and candy will dissuade consumption is unknown. More certain are the fiscal consequences: the tax would generate approximately $900 million annually. That money would go towards health services and programs to promote healthy diets and lifestyles, which could, perhaps, have the desired effect.

Ms. Garcia is taking her time. If her ACA is approved, she hopes to put a snack tax up for a popular vote in 2018.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.