An examination of the claims being made around the proposed Oregon ban on taxing ‘groceries’
Oregon voters will soon decide whether to place a statewide ban on taxing groceries. But what exactly “groceries” are and to what industries this ban would extend are points of debate between Ballot Measure 103’s supporters and opponents.
Depending on which side’s doing the talking, this measure is either a corporate giveaway that will apply to fuel taxes, Medicaid dollars and changes to the Bottle Bill or a measure to keep food costs down at Oregon supermarkets following an onslaught of local and statewide attempts at taxing groceries.
Both the grocery-chain-backed vote-yes campaign and the public-employee-backed vote-no campaign have a vested interest in their position.
An attorney at the Department of Justice found the measure would not affect Medicaid funding under Measure 101 or fuel tax increases passed with the latest legislative transportation package. However, an attorney working for Our Oregon said it would. Now the two campaigns are engaged in a public spat over who is telling the truth.
No matter who’s right, the state would likely be drawn into costly legal battles as health care and other industries seek tax exemptions they may be entitled to under the proposed law.
We took a closer look at some of the claims encircling this measure, as parsing out the facts is crucial. Measure 103 is proposing a constitutional amendment whose passage could result in long-lasting and unintended consequences for Oregon. Voters should know what they’re voting on.
While it’s unclear how the ensuing court battles would play out, here’s what we do know about each side’s accusations:
The Opposition: 'No on Measure 103'
Our Oregon, a lobbying group representing public-employee unions, is heading up the opposition to Measure 103 with major funding from the Oregon Education Association. Its vote-no coalition also includes trade unions, environmental groups, civil rights groups, the Democratic Party of Oregon and a range of small grocers, farmers and restaurants.
CLAIM:
This measure defines groceries in a misleading way you would never find in the dictionary.
FACT
According to Webster’s New World Dictionary, grocery is “the food and supplies sold by a grocer.” The measure applies to food and beverages, not supplies such as toilet paper, diapers and other household goods. Additionally, the measure is written to include food and beverages at every step in the supply chain, which extends the tax ban far beyond the aisles of a supermarket.
CLAIM:
The tax ban would include meals at restaurants.
FACT
In Measure 103’s summary on the ballot, voters will read that “certain restaurants” are subject to the tax ban.
A spokesperson for Our Oregon said “certain restaurants” refers to all restaurants outside of Yachats and Ashland, where taxes on restaurant meals are used as a way of capturing tourism dollars. These taxes pre-date the measure and would continue until expiration.
Yes-campaign spokesperson Dan Floyd said “certain restaurants” refers to “food-prep” establishments, such as Papa Murphy’s, that are licensed by the Oregon Department of Agriculture’s Food and Safety Division. He said only establishments inspected by that division are implicated in the ban.
But that’s not the way the measure was written.
Oregon’s Supreme Court and Office of the Attorney General have clarified that the measure does, in fact, apply to restaurant meals.
“We disagree with the AG’s opinion,” Floyd said in an email.
But disagreeing doesn’t change the fact that this is now a settled legal matter.
While the campaign may be in denial, restaurants aren’t. In the voter’s pamphlet, Oregonians will see an argument in favor of the measure from Oregon Restaurant & Lodging Association stating the measure’s “broad definition includes food and beverages purchased from restaurants.”
CLAIM:
This measure hurts small farms, grocers and restaurants because it prevents the government from giving them future tax relief.
POTENTIALLY
Measure 103 freezes the corporate minimum tax for grocery sellers. While profitable sellers pay Oregon’s regular tax, this minimum tax is paid when small businesses don’t make enough money. While it’s true this tax could never be lowered for sellers if Measure 103 passes, it couldn’t be raised either, meaning it also insulates sellers from future hikes to this minimum tax.
CLAIM:
Measure 103 would permanently block taxes on e-cigarettes.
FACT
Measure 103 bans taxes on all items meant for human consumption but exempts alcohol, marijuana and tobacco products. And while it describes tobacco products in great detail, e-cigarettes and vape pens aren’t included. Because these items contain nicotine but not tobacco, Measure 103 would ban their taxation. Intended or not, this is a constitutional tax exemption e-cigarette companies would likely fight to maintain.
CLAIM:
Measure 103 would prevent changes from being made to the Bottle Bill.
UNLIKELY
According to an analysis by the Oregon Beverage Recycling Cooperative – the very corporation that executes the collection, refunding and recycling components of the Oregon Bottle Bill – Measure 103 would not affect the Bottle Bill.
Company spokesperson Jules Bailey explained that’s because the Bottle Bill requires a refund value, but not the initial deposit. This argument seems logical, and considering OBRC has the most skin in this game, we’re inclined to take its word for it. We’re stopping short of calling this claim flat-out fiction, however, because Our Oregon’s argument that a refund could be considered an assessment or fee is not entirely outside the realm of possibilities when it comes to this broadly written measure.
CLAIM:
Measure 103 would impact weight-per-mile rates paid by trucks carrying groceries.
LIKELY
Our Oregon attorney Steven Berman argued Measure 103 would affect fuel taxes and the weight-per-mile tax charged to trucks that are transporting groceries because the tax ban encompasses transactions where groceries are “transferred to” or “received from.”
Oregon Department of Transportation reviewed Berman’s analysis and found it to be a plausible legal interpretation when it came to the weight-per-mile tax charged to trucks weighing more than 26,000 pounds. ODOT agrees Measure 103 would lock in weight-per-mile rates. The revenue collected through this tax makes up one-third of the state’s highway fund, but how much of that is from the transport of groceries is unknown. ODOT also believes this impact of the measure would ultimately end up in court.
CLAIM:
Measure 103 would affect fuel tax increases passed under the 2017 transportation package.
UNLIKELY
According to the Oregon Department of Transportation, Measure 103 would not affect the fuel tax because it’s a tax on the combustion of fuel, not on the transportation of goods. However, the courts could decide differently.
SR EDITORIAL ENDORSEMENT: It's not about your groceries; vote 'no'
Campaign: “Yes! Keep Our Groceries Tax Free!”
Major donors to the “vote yes” campaign include Albertsons-Safeway, Kroger (Fred Meyer) and Costco. Measure 103 co-sponsor Ron Brake owns two FOOD 4 LESS grocery stores, and his co-sponsor Syd Hannigan is a former Safeway executive. “Vote yes” campaign supporters include an array of grocers such as Zupan’s Markets and McKay’s Market, city and statewide chambers of commerce, as well as farm and cattle associations.
CLAIM:
By voting yes on 103, your family’s groceries will always be tax free.
MOSTLY FACT
This measure would amend the state Constitution to ban a sales tax on “raw and processed food and beverages,” but it could be reversed if voters decided to repeal the ban in the future. It would not ban a sales tax on grocery items such as toilet paper, diapers and other household goods.
CLAIM:
Oregon politicians and special interests want to tax your groceries.
MOSTLY FICTION
No politician or special interest in Oregon wants to target your grocery bill. While promotional content from the vote-yes campaign makes it appear as though this measure is meant to fend off taxes on groceries that would hurt consumers, it’s really aimed at protecting grocery stores from ongoing efforts to raise tax revenue from giant corporations operating in Oregon. Yes, some of those corporations are grocers, but efforts to raise revenues such as Measure 97 would have applied only to the largest companies, not every business that sells food.
There have also been efforts to place sin taxes on some items found in grocery stores that are deemed harmful to a person’s health, such as tobacco and soft drinks. While the claim that politicians are trying to tax groceries may hold a kernel of truth, the way this claim is presented is purposefully misleading.
CLAIM:
“Opponents of Measure 103 are the same powerful special interests that have been trying to tax your groceries for years.”
MOSTLY FICTION
Because no special interests have been “trying to tax your groceries for years,” this statement is false.
But opposition to Measure 103 is headed up by union-backed Our Oregon, which was also a major proponent of Measure 97. In both campaigns, Oregon’s public school teachers union, the Oregon Education Association, was listed among top donors. So while teachers and other public employee unions aren’t trying to tax your groceries, they are a special interest that has had a hand in both efforts the yes campaign is referencing.
CLAIM:
There have been five efforts in four years to tax groceries in Oregon.
FICTION
The Vote Yes campaign has distributed fliers and produced ads that list what it said are five efforts to tax groceries. While some of the campaign’s examples would have raised taxes on businesses that sell groceries, none would have been a consumer sales tax on groceries, would have targeted grocers specifically or would have included all grocers.
A closer look: What Measure 103 supporters say were efforts to ‘tax your groceries’
Senate Joint Resolution 18, 2015
This bare-bones proposal for a non-specific sales tax to fund schools died before it got off the ground. During a hearing, Oregon Sen. Lee Beyer (D-Springfield) told the senate finance committee that he “asked legislative council to write it very, very general, with the idea that if the citizens decided they wanted to support it, it would be up to a subsequent legislature to define what that would be.” Options on the table, he said, could include a general sales tax, such as in Washington State – which excludes retail food items. True, this sales tax didn’t explicitly exclude groceries, but it was never intended to serve as the final piece of legislation. To say this was an attempt to tax groceries is false.
Measure 97 and Initiative Petition 27, 2016 and 2017
Measure 103 was written in response to these two failed proposals. Measure 97 would have placed a 2.5 percent gross receipts tax on corporations doing more than $25 million in sales within the state. IP 27 would have increased the state’s corporate income tax and added a tax to corporations with gross receipts in Oregon totaling more than $5 million. Neither were aimed at taxing groceries, but rather multi-million-dollar and billion-dollar corporations that have a lower business tax burden in Oregon than they do in most other states. Smaller grocers would not have been subject to the tax. This was not an explicit attempt to “tax groceries.”
House Bill 2330, 2017
Street Roots couldn’t figure out how this bill relating to electric vehicle charging stations made the list, but it was listed on fliers and in an op-ed written by Measure 103’s co-sponsors, grocery store owner Ron Brake and former Safeway executive Syd Hannigan. When we asked the campaign to explain why it included this bill, it said it was a typo. What they meant, spokesperson Dan Floyd said, was House Bill 2830, which proposed an increase on corporate excise taxes after the first
Measure 23-58 in Ontario, 2018
This local measure, defeated in May, would have applied a 1 percent, capped sales tax to retail purchases. “Certain food or beverage sales” were exempted from this tax.
Initiative Petition 21, 2017
This initiative wasn’t included in the campaign’s ads and fliers but was listed in an op-ed penned for the Statesman Journal by Measure 103’s co-sponsors, Brake and Hannigan, as an attempt to tax groceries. This proposal was explicitly aimed at taxing tobacco products. If Brake and Hannigan are going to exempt tobacco on their own definition of groceries, then we’re going to call bullshit on their claim that an initiative to tax tobacco was an attempt to tax groceries.
Measure 103 EXCERPTS
Explanatory statement
The measure prohibits taxes, fees, and assessments on the purchase or sale of raw or processed food or beverage intended for human consumption at all stages, including agricultural crops and food and beverage products of all types, whether in warehouses, transit, packaging and processing plants, certain restaurants, or other locations, when the commodity, product, facility, establishment, or commercial activity is regulated under specified federal or state food safety programs.
The Amendment
This excerpt of the constitutional amendment Measure 103 proposes defines groceries and the transactions that could not be taxed. We bolded some words to illustrate how this statute could apply to virtually any entity that sells food.
Section 16 (3)
(a) “Groceries” means any raw or processed food or beverage intended for human consumption except alcoholic beverages, marijuana products and tobacco products.
(b) “Sale or distribution of groceries” means any transaction for the sale , purchase, distribution, or transfer of groceries sold, distributed, transferred to, or purchased, or received from, any individual or entity that:
(A) Is licensed, registered, or inspected under the Food Safety Modernization Act, U.S. Food and Drug Administration, U.S. Department of Agriculture Federal Grain Inspection Service, or any successor agency or program that provides for the safety of groceries; or
(B) Is licensed and inspected by the State Department of Agriculture’s Food Safety Program or Commodity Inspection Program or any successor agency or program that provides for the safety of groceries; or
(C) Operates as a farm stand, farmers market, or food bank.
(c) “Tax, fee, or other assessment” includes, but is not limited to, a sales tax, gross receipts tax, commercial activity tax, value-added tax, excise tax, privilege tax, and any other similar tax on the sale of groceries.
Email Senior Staff Reporter Emily Green at emily@streetroots.org . Follow her on Twitter @greenwrites .
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