The proposed measure reversed certain 2010 amendments to state tax laws including a sales tax on candy and bottled water and a temporary excise tax on soda pop.[1][2]

On July 2, 2010 initiative supporters submitted an estimated 395,103 signatures, exceeding the 241,000 minimum requirement.[3] On July 28, election officials reported that I-1107 had qualified for the ballot.[4]

Text of measure

Title

Concise Description:This measure would reduce tax rates for certain food processors; end the sales tax on candy; and end the temporary sales tax on some bottled water and temporary excise taxes on carbonated beverages.

Should this measure be enacted into law? Yes [ ] No [ ]

Summary

This measure would reverse certain 2010 amendments to state tax laws, thereby: ending the sales tax on candy and the temporary sales tax on some bottled water; and ending temporary excise taxes on the activity of selling certain carbonated beverages, not including alcoholic beverages or carbonated bottled water. It would also reinstate a reduced business and occupation tax rate for processors of certain foods.

Background

Initiative 1107 was proposed by the American Beverage Association in reaction to the April 2010 approval of temporary taxes on soda and other sugary beverages. The tax amounted to 2 cents on every 12 ounces of soda. Similar taxes were implemented in Maine and Colorado but beverage industry lobbyists squashed efforts to pass a soda tax in 2010 in Mississippi, New Mexico and New York state. The tax was expected to generat revenue in order to ease the $2.8 billion budget gap. The tax was estimated to raise $94 million.[5][6]

Effects if measure passes

I-1107 repealed the 2010 temporary excise tax on carbonated beverages in addition to a three year temporary sales tax on bottled water that was scheduled to last from 2010 to 2013. The sales tax on candy was also repealed in addition to a revision of a tax on certain processed foods.[7]

Conflicts with R-52

I-1107 conflicted with R-52 because the initiative abolished the temporary sales tax on bottled water if approved. R-52 called for a temporary expansion of the bottled water sales tax until 2013 if approved[8]. Abolishing sales tax revenue through I-1107's approval including bottled water would make it difficult for the state to pay for energy efficiency projects that are contingent on that revenue.[9] However, according to official election results R-52 was defeated.

Support

In support of the proposed measure, the American Beverage Association (ABA), was reported to have spent an estimated $1 million gathering petition signatures for the July 2 statewide deadline.[5] According to October 2010 reports, supporters of the proposed measure reportedly raised more than $16 million, making this the most expensive initiative campaign in Washington state history.[10] Members of ABA included Coca-Cola Co., PepsiCo Inc. and Dr Pepper Snapple Group Inc.[11]

Donors

According to August 2010 reports, supporters spent an estimated $2.5 million to get signatures and put I-1107 on the 2010 ballot.

In August 2010 the American Beverage Association reportedly made at least two $3.5 million contributions. The campaign was reported to have had $10.2 million in total donations.[12][13] However, as of early September 2010, the supporting campaign reported raising an estimated $14.4 million, which according to news reports made I-1107 the most expensive initiative campaign in state history.[14][15][16]

The following is a list of the top five donors to the campaign in support of I 1107:[17].

Contributor

Amount

American Beverage Association

$16,501,000

Willams Inland Distributors

$100

Francis Jennigs

$50

Jack Karsten

$50

Daniel Kraft

$50

Tactics and strategies

In September 2010, according to Kathryn Stenger, spokesperson for the campaign, said that supporters were preparing to launch a statewide campaign.[14]

Opposition

Opponents, including advocates for children, education and health care, argued that I-1107 was "misleading and deceptive." The main campaign group in opposition to the proposed measure was Citizens to Protect Our Economic Future and the Protect Washington coalition. Opponents said they wanted to preserve the taxes on soda pop and candy in order to avoid drastic cuts to health care and education.[14]

In regard to initiative campaign efforts, opposition spokesperson Sandeep Kaushik said, "I think this reinforces what we’ve been saying all along – that it’s clear the beverage association understands that in an equal debate, they would lose. So they’ve decided to try to buy the election with extraordinary record amounts of cash...They are interested in protecting their massive profits and spend extraordinary amounts to preserve them."[14]

"This is about large soda companies coming into our state and trying to get a tax break. I really, really doubt that the American Beverage Association put more than $14 million in Washington because they’re worried about how much Washingtonians pay in taxes," said Celia Schorr, spokeswoman for No on I-1107.[11]

Donors

According to September 2010 reports, Citizens to Protect Our Economic Future raised $304,229 to fight the repeal measure.[14]

Below is a chart that outlines major cash contributions to the campaign in opposition of I-1107:[18].

Contributor

Amount

Community Health Network of Washington

$60,000

SEIU Washington State Council

$60,000

Washington Federation of State Employees

$60,000

Washington Education Association

$40,000

Group Health Cooperative of Washington State

$25,000

Reports and analysis

OFM impact report

Over five fiscal years, the initiative reduces State General Fund revenues by an estimated $352 million and state performance audit revenue by an estimated $359,000. Revenue for local jurisdictions authorized to impose a sales tax is reduced by $83 million over five fiscal years. Taxpayer noncompliance and confusion could result in additional state and local government revenue decreases up to $8.7 million and $1.8 million, respectively, in fiscal year 2011. Net state costs to administer the tax revisions are $98,200 over five fiscal years.

Budget and Policy Center

The Washington State Budget and Policy Center released an analysis of several Washington 2010 initiatives, including I-1107. According to the study, the impact of I-1107 to the state's general fund over a 5-year period was estimated at $352 million. The study concluded that the initiative would reduce state resources in current and future fiscal years. Such resources would include repealing revenue increases approved in 2010 which the organization described as having "played a pivotal role in preventing painful and economically damaging cuts to essential public services."[19][20]

Media Editorial Positions

Support

The Pacific Northwest Inlander supported I-1107. In an editorial, the board said, "...the package of taxes our leaders pulled together as a kind of legislative Hail Mary pass — on everything from soda to bottled water to (some) candy bars — was flat-out bad policy. They knew it wasn’t a long-term solution; in fact, the Band-Aid package would expire in 2013. These are the worst of the regressive taxes Washington is known for. Big Soda doesn’t pay a penny; it gets passed along to consumers, hitting those who can least afford it hardest. And in border counties, it’s tough to compete with Idaho and Oregon."[21]

The Yakima Herald-Republic supported I-1107. "Among the tax increases approved in the past session were an excise tax on soda, a sales tax on bottled water and candy, and an increased B&O tax on some food processors. This initiative would repeal them, and rightfully so. Advocates say there is a three-year "sunset" provision in the taxes. But as we editorialized in July, lawmakers may be more tempted than a kid in a candy store to expand them to other edible items," said the editorial board.[22]

The Bellevue Reporter was in support. "The Legislature needs to stop the taxing. A 'Yes' on I-1107 will reverse the taxes and force the Legislature to do its job," said the board.[23]

Opposition

The Seattle Times opposed I-1107. In an editorial, the board said, "It would create a $200 million hole in the state's next two-year budget — and already that budget appears to be at least $3 billion short."[24]

The Tacoma News Tribune opposed I-1107. In an editorial, the board said, "Now the American Beverage Association has come to Washington to mount the same assault that it’s successfully pushed elsewhere. It has contributed almost every penny of the $14 million the I-1107 campaign has in the bank. That campaign has tried mightily to bill the initiative as a fight against “grocery taxes” – a spin job that hangs by such a small thread of truth as to be nearly fraudulent."[25]

The Olympian opposed I-1107. In an editorial, the board said, "Or do we, instead, want to make a small sacrifice and spend an additional 2 cents for a 12-ounce soda pop to keep necessary services in place? The choice seems obvious."[26]

The Stranger was opposed to the proposed initiative. The editorial board wrote, "The reason this tax exists at all is because the state has a budget shortfall, despite cutting billions from departments for the last two years. Lawmakers had to either pass this tax or cut health care for kids, essential funding for public schools, or other programs that help the poorest people in the state. So while it's an arguably regressive tax—sales taxes consume a larger percentage of poor people's income than rich people's—it produces roughly $130 million per year to help the poor. And it's their only hope for funding those programs."[28]

Publicola opposed I-1107. "PubliCola urges voters to oppose this initiative, which would eliminate reasonable taxes that were passed this year to help preserve critical programs that would otherwise have been cut. A few cents on a can of soda is a small price to pay for environmental, health, and education programs that benefit all Washington residents," said the editorial board.[29]

The Kitsap Sun opposed the measure. "We oppose I-1107 because it pulls the plug on needed revenues midway through the state’s 2009-2011 budget. The Legislature also should amend the candy tax so it is more understandable and uniform," said the board.[30]

Polls

An August 26-August 29, 2010 poll of 650 likely voters by Survey USA showed that 42% of voters were certain they would support I-1107, 34% were certain they would oppose the measure, and 24% were undecided. [31][32]

A September 9-12, 2010 poll of 500 likely voters by Elway Poll revealed that 47% supported the proposed measure, while 38% were opposed and 15% were undecided.[33][34][35]

A September 30-October 3, 2010 poll of 639 likely voters by Survey USA revealed that 52% supported the proposed measure, while 29% were opposed and 19% were undecided. The poll was sponsored by KING-TV Seattle. The margin of error was +/- 4 percentage points.[36]

An October 7-10, 2010 poll of 400 likely voters by Elway showed that 54% supported the proposed measure, while 33% opposed it and 13% were undecided.[37]

An October 4-14, 2010 poll of 500 likely voters by The Washington Poll showed that 56% supported the proposed measure, while 36% opposed it and 7% were undecided. The margin of error was +/- 4.3 percentage points.[38]

An October 24-27, 2010 poll of 504 likely voters by SurveyUSA showed that 56% supported the proposed measure, while 36% opposed it and 9% were undecided. The margin of error was +/- 4.4 percentage points.[39]

Legend

Position is ahead and at or over 50% Position is ahead or tied, but under 50%