Petitioners for the I-1107 campaign, which calls itself the "Stop Tax Hikes on Food and Beverages" campaign, hit the streets this week. The initiative would repeal the new sales taxes on soda, gum, and candy, approved this last legislative session.
Most wouldn't consider gum and candy to be "food," but that's where the campaign got creative, at least according to the initiative's opponents. The campaign, and their petitioners, advertise the initiative as a repeal of grocery taxes, implying that the legislature is levying a sales tax on food purchased at grocery stores.
What they are technically referring to, however, is a clause inserted into 1107 that aims to undo a budget item from this year's legislative session. That item made a change to certain state business and occupation (B&O) taxes levied on food processors.
The small change allows the campaign to say their initiative is going to cut taxes on food.
The legislative "fix" passed earlier this year stems from a 2005 State Supreme Court case that awarded a B&O exemption, previously given only to meat processors, to a broader group of food producers. The 2010 legislative fix cuts exemptions on some food processors—particularly for nonperishable items like soup and chili—while making other food processors eligible for B&O exemptions.
Opponents of I-1107 say the initiative, in repealing the legislative fix, could actually cause some B&O taxes to go up. But their main point is that the campaign is lying to voters by implying that there are new taxes on food.
"They're trying to give the very misleading impression that this is about food and groceries," said Sandeep Kaushik, spokesperson for Citizens to Protect Our Economic Future. The 1107 opponents filed a brief in Washington State Superior Court against the Yes on I-1107 campaign, saying their current ballot description, which says I-1107 "reduces taxes for certain food processors," is inaccurate.
Previously, the Attorney General's office rejected the Yes on I-1107 campaign's original ballot description, which said that their initiative would lower taxes on food.
I have a call in to Rep. Ross Hunter (D-48), the finance committee chair in the House, to get his take on what a repeal of the legislative fix could mean. But in March, Hunter's office said the point of the fix was to clarify the legislature's goal of providing tax relief to processors of perishable foods, which was undone by the court ruling. "The goal of the original Supreme Court ruling expanded the existing preference well beyond the legislature’s original intent," Hunter's 2010 budget rundown said.
The Yes on 1107 campaign (their website is at stopgrocerytaxes.com) is funded entirely by the American Beverage Association, the soda pop lobby, which has contributed almost $1.1 million to the campaign, according to the Public Disclosure Commission. Last session, the lobby spent $5.4 million to fight against a sales tax on soda—a 3,700 percent increase in their spending from the first quarter last year.
I have a couple of calls in to the Yes on I-1107 campaign to get their take on all this. Yesterday, a campaign spokesman told the Tacoma News Tribute, simply, "The reality is, these taxes increase taxes on Washington food companies."
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