Governor Newsom Can Save California Families and Small Businesses From 20% Food Tax with AB 257 Veto

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SACRAMENTO, Calif.–(BUSINESS WIRE)–The Stop AB 257 Campaign released the following statement today urging Governor Newsom to veto Assembly Bill 257, the so-called Fast Food Accountability Act, after the Senate passes it today :

“Reckless and costly legislation that hits working families during record inflation is not the way to protect anyone – consumers, workers or small businesses. Clearly, the Legislature is out of touch with California’s fiscal realities, choosing to pass this 20% food tax on to California counter service customers. Governor Newsom has a chance to do good for all and veto this bill. His own Ministry of Finance opposed AB 257, saying it would increase costs without solving the problem it purports to solve.

“Soaring costs for food, gas and rent are crushing consumers and local restaurants. Now the legislature is raising food prices to fund an unelected council, bringing vested interests into the government of The council usurps power from state agencies that are underfunded and underresourced to protect workers.

California small businesses share concerns:

“Even in this time of historic prices, we have resisted price increases from our customers because we know they cannot afford it,” said Jesse Lara, El Pollo Loco franchisee in Southern California. “Governor Newsom knows that if AB 257 becomes law, small businesses like mine will have no choice but to raise prices to stay afloat or be forced out of business.”

“AB 257 hurts local small businesses like mine while raising prices for local families and visitors to our state,” said Alex Johnson, owner of 11 franchise restaurants in California. “During the highest inflation in 40 years, this bill hurts everyone from local businesses and their employees to the millions of Californians who depend on quick-service restaurants every week. Governor Newsom must veto this bill – it is not the way to help workers, consumers or businesses prosper.

“Our customers come to us because we are affordable,” explained Sanna Shere, a Burger King franchisee based in Southern California. “California are already suffering the brunt of inflation, and the FAST Act will make it harder to live, work, and own a business in the state. By signing this bill, Governor Newsom will effectively dismantle the franchising business of California, which has given so many women and minority entrepreneurs a higher rate of business ownership across the state.

This week, the International Franchise Association and the California Restaurant Association launched ads across California to highlight the negative economic impact of AB 257 on California families and restaurants, while encouraging Governor Newsom to oppose his veto to AB 257.

“AB 257 is a discriminatory measure aimed at targeting the business model of the franchise”, said Matthew Haller, president and CEO of the International Franchise Association. “The bill creates an arbitrary standard for a sector of workers while punishing small business owners and their customers. Franchising has opened the door for hundreds of thousands of entrepreneurs to pursue their dreams and millions of workers to establish careers, but this bill will smash all of that while raising prices for Californians and forcing restaurants to close. Governor Newsom should stand up for local businesses, Californians, and responsible government, and veto this legislation.

AB 257 is not supported by Californians, economists or data

Still today, the US Black Chambers, Inc. (USBC), the National Asian/Pacific Islander American Chamber of Commerce and Entrepreneurship (National ACE), and the National LGBT Chamber of Commerce (NGLCC), in partnership with the California Black Chamber of Commerce and the CalAsian Chamber of Commerce, sent a letter to members of the Senate expressing their concerns about the bill and urging lawmakers to vote no on AB 257. As these organizations point out in their letter, “Not only do franchise models provide minority entrepreneurs with unexplored economic opportunities, but the franchise model represents a key pathway to realizing the American Dream while generating jobs, revenue and opportunities for their immediate communities”. This bill would do irreparable harm to minority-owned businesses, their operators and their families, and to the very workers that the proponents of this bill seek to support.

Given that AB 257 will increase costs for consumers and hurt local businesses, it’s no surprise. less than a third of Californians support this bill. Additionally, support for AB 257 has dropped 10 points since March 2022, according to a new survey from RG Strategies.

The Employment Policy Institute has published a new investigation from American Labor Economists, which found that 83 percent oppose AB 257. The survey reflects economists’ deep concerns about the bill’s negative impacts on the growth of the fast food industry, jobs and price inflation.

AB 257 also starts from the erroneous assumption that working conditions are worse in restaurants at the counter than in other establishments in the food sector, which is why they are singled out by this bill. But one recent analysis suggests that this claim is flatly false and unsupported by the state’s own data.

To speak with a small business owner who may be affected by AB 257, please contact Patrick George at (916) 202-1982.

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