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Local soda taxes now prohibited in Washington

soda can crushed

Local soda taxes are now prohibited in the state of Washington.

After Berkeley, San Francisco, Philadelphia, Seattle, and a handful of other U.S. cities imposed local taxes on sugary beverages, the soda industry went on the offensive. In recent months, it poured millions into West Coast states to prevent the spread of local soda taxes. Its efforts paid off in California and Washington, but not in Oregon.

Earlier this year, the American Beverage Association (ABA) pushed California lawmakers into temporarily prohibiting the local taxation of groceries, though in fact only sweetened beverages were at risk of being taxed, and only in four additional localities.

After successfully stopping the spread of local soda taxes in California, the soda industry moved north. It backed Oregon Measure 103, the Ban Tax on Groceries Initiative; and it was behind Washington Initiative 1634, the Prohibit Local Taxes on Groceries Measure. Though both measures were marketed as prohibiting taxes on fruits, vegetables, and other foods, both were created to prevent the taxation of soda and other sweetened beverages.

On November 6, Oregonians defeated Measure 103: 57 to 43 percent. Had it been approved, Measure 103 would have banned state and local taxes on “raw or processed food or beverages intended for human consumption,” excluding alcohol, tobacco, and marijuana.

Currently, there are no special taxes on soda in Oregon. The idea was floated in Multnomah County (home to Portland) for the May 2018 ballot, but it was abandoned. Backers chose not to pursue it on the November ballot.

There is a local soda tax in Washington: Seattle’s sweetened beverage tax took effect January 1, 2018. Yet on November 6, Washingtonians voted, 55 to 45 percent, to ban future local taxes on food and soda. This measure won’t affect Seattle’s soda tax, but it will prevent other cities from following Seattle’s lead. The state still has the authority to impose a statewide tax on food and beverages.

Taxes targeting specific products and services can complicate tax compliance. In Vermont, where there’s a statewide tax on sweetened beverages, retailers sometimes have to read ingredients to determine whether tax should apply. Months after the tax took effect, there was still widespread confusion over which drinks were and were not subject to the special tax.

Automating sales tax compliance can facilitate compliance for all businesses in all states

Avalara Author
Gail Cole
Avalara Author Gail Cole
Gail Cole began researching and writing about sales tax for Avalara 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.