Bill Text: CA SB622 | 2013-2014 | Regular Session | Amended
Bill Title: Taxation: sweetened beverage tax: Children's Health
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced - Dead) 2014-02-03 - Returned to Secretary of Senate pursuant to Joint Rule 56. [SB622 Detail]
Download: California-2013-SB622-Amended.html
BILL NUMBER: SB 622 AMENDED
BILL TEXT
AMENDED IN SENATE MAY 8, 2013
AMENDED IN SENATE APRIL 15, 2013
INTRODUCED BY Senator Monning
( Coauthor: Senator
DeSaulnier )
FEBRUARY 22, 2013
An act to add and repeal Part 14.5 (commencing with
Section 32600) to of Division 2 of the
Revenue and Taxation Code, relating to taxation.
LEGISLATIVE COUNSEL'S DIGEST
SB 622, as amended, Monning. Taxation: sweetened beverage tax:
Children's Health Promotion Fund.
Existing law imposes various taxes, including taxes on the
privilege of engaging in certain activities. The Fee Collection
Procedures Law, the violation of which is a crime, provides
procedures for the collection of certain fees and surcharges.
This bill would, on and after July 1, 2014, and until July 1,
2024, impose a tax on every distributor, as defined, for the
privilege of distributing in this state bottled sweetened beverages,
at a rate of $0.01 per fluid ounce and for the privilege of
distributing concentrates in this state, either as concentrate or as
sweetened beverages derived from that concentrate, at the rate of
$0.01 per fluid ounce of sweetened beverage to be produced from
concentrate. The tax would be administered by the State Board of
Equalization and would be collected pursuant to the procedures set
forth in the Fee Collection Procedures Law. This bill would exempt
from the tax, among other things, the distribution in this state of
bottled sweetened beverages or concentrate made by a distributor to
another distributor registered with the board and supported by an
exemption certificate that consists of a statement signed under
penalty of perjury.
By expanding the definition of the existing crime of perjury and
by expanding the application of the Fee Collection Procedures Law,
the violation of which is a crime, this bill imposes a state-mandated
local program.
The bill would require the board to deposit all taxes, penalties,
and interest collected, less refunds and administrative costs, in the
Children's Health Promotion Fund, which this bill would create. This
bill would require all moneys in the fund, upon appropriation by the
Legislature, to be allocated to the State Department of Public
Health and Superintendent of Public Instruction, as specified, for
the purposes of statewide childhood obesity prevention activities and
programs and to provide funds to either the University of
California or the California State University to conduct a specified
report . This bill would also authorize the State Public Health
Officer and the Superintendent of Public Instruction to make rules
and regulations, and provide procedural measures, to bring into
effect those purposes.
This bill would make legislative findings and declarations
relating to the consumption of sweetened beverages, childhood
obesity, and dental disease.
This bill would include a change in state statute that would
result in a taxpayer paying a higher tax within the meaning of
Section 3 of Article XIII A of the California Constitution, and thus
would require for passage the approval of 2/3 of the membership of
each house of the Legislature.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of the
following:
(a) The prevalence of obesity in the United States has increased
dramatically over the past 30 years. From the 1960s to the late
1970s, the prevalence was relatively constant, with about 15 percent
of the population classified as obese. After the 1970s, these rates
began to climb. In California, obesity rates have increased even
more, rising from 8.9 percent in 1984 to 23.8 percent in 2011.
Although no group has escaped the epidemic, low income and
communities of color are disproportionately affected.
(b) The rate of children who are overweight has also increased
dramatically in recent decades. After being relatively constant from
the 1960s to the 1970s, the prevalence of overweight children has
more than quadrupled among children between 6 and 11 years of age and
nearly tripled among those between 12 and 19 years of age.In
California in 2010, 38 percent of children in grades 5, 7, and 9 were
overweight or obese. Thirty-one of California's 58 counties
experienced an increase in childhood overweight from 2005 to 2010.
(c) The obesity epidemic is of particular concern because obesity
increases the risk of diabetes, heart disease, certain types of
cancer, arthritis, asthma, and breathing problems. Depending on their
level of obesity, from 60 percent to over 80 percent of obese adults
have type 2 diabetes, high blood cholesterol, high blood pressure,
or other related conditions. It has been reported that up to 60
percent of obese children 5 to 10 years of age have early signs of
heart disease.
(d) Type 2 diabetes, previously only seen among adults, is now
increasing among children. If the current obesity trends are not
reversed, it is predicted that one in three children and nearly
one-half of Latino and African American children born in the year
2000 will develop type 2 diabetes in their lifetime. Research shows
that overweight children have a much greater chance of being obese as
adults, with all the health risks that entails.
(e) Overweight and obesity account for $147 billion in health care
costs nationally, or 9 percent of all medical spending - with half
these costs paid publicly through the Medicare and Medicaid programs.
Medical costs associated with obesity are estimated at $147 billion;
the medical costs for people who are obese are dramatically higher
than those of normal weight.
(f) In 2006, overweight and obesity-related costs in California
were estimated at almost $21 billion.
(g) There is overwhelming evidence of the link between obesity and
the consumption of sweetened beverages, such as soft drinks, energy
drinks, sweet teas, and sports drinks. California adults who drink a
soda or more per day are 27 percent more likely to be overweight or
obese, regardless of income or ethnicity.
(h) According to nutritional experts, sweetened beverages, such as
soft drinks, energy drinks, sweet teas, and sport drinks, offer
little or no nutritional value, but massive quantities of added
sugars. A 20-ounce bottle of soda contains the equivalent of
approximately 16 teaspoons of sugar. Yet, the American Heart
Association recommends that Americans consume no more than five to
nine teaspoons of sugar per day.
(i) Research shows that almost one-half of the extra calories
Americans have been consuming since the 1970s could come from soda,
with the average American drinking nearly 50 gallons of sweetened
beverages a year, the equivalent of 39 pounds of extra sugar every
year.
(j) Though sugar sweetened beverage consumption is declining
slightly as people learn about their harmful health effects,
Americans are still consuming twice as much of these products as they
did in the 1970's. Children and adolescents consume 173 calories per
day of sugary drinks; adults consume 178 calories per day of sugary
drinks. Children and adolescents consume 10 to 15 percent of their
daily caloric intake from sweetened beverages.
(k) Research shows that 41 percent of California children 2 to 11
years of age and 62 percent of California teens 12 to 17 years of age
drink soda daily, and for every additional serving of sweetened
beverage that a child consumes a day, the likelihood of the child
becoming obese increases by 60 percent.
(l) Sugary drinks are a unique contributor to excess caloric
consumption. A large body of research shows that calories from sugary
drinks do not satisfy hunger the way calories from solid food or fat
or protein-containing beverages such as those containing milk and
plant-based proteins. As a result, sugary beverages tend to add to
the calories people consume rather than replace them.
(m) Dental caries (tooth decay) are the most common chronic
childhood disease, experienced by more than two-thirds of California'
s children. Children who frequently or excessively consume beverages
high in sugar are at increased risk for dental caries. Untreated
dental caries can lead to pain, infection, tooth loss, and in severe
cases, even death. It can slow normal growth and development by
restricting nutritional intake. Children who are missing teeth may
have chewing problems that limit their food choices and result in
nutritionally inadequate diets.
(n) It is the intent of the Legislature, by adopting the Sweetened
Beverage Tax Law and creating the Children's Health Promotion Fund,
to diminish the human and economic costs of obesity and dental
disease in California. This act is intended to discourage excessive
consumption of sweetened beverages by increasing the price of these
products and by creating a dedicated revenue source for health
programs designed to prevent and treat childhood obesity and dental
disease and reduce the burden of attendant health conditions.
SEC. 2. Part 14.5 (commencing with Section 32600) is added to
Division 2 of the Revenue and Taxation Code, to read:
PART 14.5. SWEETENED BEVERAGE TAX LAW
32600. This part shall be known and may be cited as the Sweetened
Beverage Tax Law.
32601. For purposes of this part:
(a) "Beverage container" means any closed or sealed container
regardless of size or shape, including, without limitation, those
made of glass, metal, paper, plastic, or any other material or
combination of materials.
(b) "Bottled sweetened beverage" means a sweetened beverage
contained in a beverage container.
(c) "Beverage dispensing machine" means a device that mixes
concentrate with any one or more other ingredients and dispenses the
resulting mixture into an open container as a ready-to-drink
beverage.
(d) "Caloric sweetener" means any caloric substance suitable for
human consumption that humans perceive as sweet and includes, without
limitation, sucrose, fructose, including high fructose corn
sweetener, glucose, other sugars, and fruit juice concentrates.
"Caloric" means a substance that adds calories to the diet of a
person who consumes that substance.
(e) "Concentrate" means a syrup, powder, or base product that is
used for mixing, compounding, or making sweetened beverages in a
beverage dispensing machine. For purposes of this part, "concentrate"
does not include any of the following:
(1) Any product that is solely used in preparing coffee or tea.
(2) Any product for consumption by infants and which is commonly
referred to as "infant formula."
(3) Any product for use for weight reduction.
(4) Milk or milk products.
(5) Any frozen concentrate or freeze-dried concentrate to which
only water is added to produce a sweetened beverage containing more
than 50 percent natural fruit juice or more than 50 percent natural
vegetable juice or more than 50 percent combined natural fruit juice
and natural vegetable juice.
(6) Any product that is sold and is intended to be used for the
purpose of an individual consumer mixing a sweetened beverage.
(7) Medical food.
(8) Any product to which no caloric sweeteners have been added.
(f) "Consumer" means a person who purchases a bottled sweetened
beverage or concentrate for a purpose other than resale in the
ordinary course of business.
(g) "Distribution" includes:
(1) The sale of bottled sweetened beverages or concentrate to a
retailer.
(2) The receipt of untaxed bottled sweetened beverages or
concentrate in this state from an unregistered out-of-state
distributor by a retailer.
(3) The retail sale of untaxed bottled sweetened beverages,
sweetened beverages, or concentrate in this state.
(4) The use or consumption of untaxed bottled sweetened beverages
or concentrate in this state by a distributor or retailer. For
purposes of this paragraph, "use or consumption" includes the
exercise of any right or power over bottled sweetened beverages or
concentrate incident to the ownership thereof, except that it does
not include the sale of that property or the keeping or retention
thereof by a distributor or retailer for the purpose of sale.
(h) "Distributor" means any person who makes a distribution of
bottled sweetened beverages, sweetened beverages, or concentrate in
the state, whether or not that person also sells these products to
consumers.
(i) "Medical food" means medical food as defined in Section 109971
of the Health and Safety Code.
(j) "Milk" means natural liquid milk, regardless of animal source
or butterfat content, natural milk concentrate, whether or not
reconstituted, regardless of animal source, plant source, or
butterfat content, or dehydrated natural milk, whether or not
reconstituted and regardless of animal source or butterfat content.
(k) "Natural fruit juice" means the original liquid resulting from
the pressing of fruit, the liquid resulting from the reconstitution
of natural fruit juice concentrate, or the liquid resulting from the
restoration of water to dehydrated natural fruit juice.
(l) "Natural vegetable juice" means the original liquid resulting
from the pressing of vegetables, the liquid resulting from the
reconstitution of natural vegetable juice concentrate, or the liquid
resulting from the restoration of water to dehydrated natural
vegetable juice.
(m) "Nonalcoholic beverage" means any beverage not subject to tax
under Part 14 (commencing with Section 32001).
(n) "Person" means an individual, trust, firm, joint stock
company, business concern, business trust, receiver, trustee,
syndicate, social club, fraternal organization, estate, corporation,
including, but not limited to, a government corporation, partnership,
limited liability company, and association or any other group or
combination acting as a unit. "Person" also includes any city,
county, city and county, district, commission, the state, or any
department, agency, or political subdivision thereof, any interstate
body, and the United States and its agencies and instrumentalities to
the extent permitted by law.
(o) "Powder" or "base product" means a solid or liquid mixture of
ingredients with added caloric sweetener used in making, mixing, or
compounding sweetened beverages by mixing the powder or base product
with any one or more other ingredients, including, without
limitation, water, ice, syrup, simple syrup, fruits, vegetables,
fruit juice, vegetable juice, or carbonation or other gas.
(p) "Retail sale" means the sale of sweetened beverages to a
consumer.
(q) "Retailer" means any person who sells in this state sweetened
beverages to a consumer, whether or not that person is also a
distributor as defined in this section.
(r) "Sale" means the transfer of title or possession for
consideration in any manner or by any means whatever.
(s) "Simple syrup" means a mixture of sugar and water.
(t) (1) "Sweetened beverage" means any sweetened nonalcoholic
beverage sold for human consumption that has caloric sweeteners and
contains more than 25 calories per 12 ounces, including, but not
limited to, the following: soda water, ginger ale, root beer, all
beverages commonly referred to as cola, lime, lemon, lemon-lime, and
other flavored beverages, including any fruit or vegetable beverage
containing less than 50 percent natural fruit juice or natural
vegetable juice or combined natural fruit juice and natural vegetable
juice, and all other drinks and beverages commonly referred to as
"soda," "soda pop," "soft drinks," "sports drinks," "energy drinks,"
"juice drinks," "ice teas," and "vitamin fortified waters."
(2) "Sweetened beverage" does not include any of the following:
(A) Any product sold in liquid form for consumption by infants,
which is commonly referred to as "infant formula" or any product
whose purpose is infant rehydration.
(B) Any product sold in liquid form for use for weight reduction.
(C) Water, to which no caloric sweeteners have been added.
(D) Milk or milk products.
(E) Medical food.
(F) Any sweetened beverage containing 50 percent or more of
natural fruit juice or natural vegetable juice or combined natural
fruit juice and natural vegetable juice.
(u) "Syrup" means the liquid mixture of ingredients used in
making, mixing, or compounding sweetened beverages using one or more
other ingredients including, without limitation, water, ice, a
powder, simple syrup, fruits, vegetables, fruit juice, vegetable
juice, or carbonation or other gas.
32602. There is hereby imposed an excise tax on every
distributor for the privilege of distributing bottled sweetened
beverages and concentrate in the state, calculated as follows:
(a) The tax on bottled sweetened beverages distributed in this
state shall be one cent ($0.01) per fluid ounce.
(b) The tax on concentrates distributed in this state either as
concentrate or as a sweetened beverage derived from that concentrate,
shall be equal to one cent ($0.01) per fluid ounce of sweetened
beverage produced from that concentrate. For purposes of calculating
the tax for concentrate, the volume of sweetened beverage to be
produced from concentrate shall be the largest volume resulting from
use of the concentrate according to any manufacturer's instructions.
32603. Each distributor shall include the following information
on each receipt, invoice, or other form of accounting for the
distribution of bottled sweetened beverages or concentrate:
(a) The name and address of the distributor.
(b) The name and address of the purchaser.
(c) The date of sale and invoice number.
(d) The kind, quantity, size, and capacity of packages of bottled
sweetened beverages, sweetened beverages, or concentrate sold.
(e) The amount of excise taxes due to the board from the
distributor on the sale of the bottled sweetened beverages or
concentrate.
(f) Any other information as required by the board.
32604. There is exempt from the taxes imposed by this part the
distribution of bottled sweetened beverages or concentrate
distributed by a distributor to:
(a) A distributor registered with the board under this part when
supported by a properly completed exemption certificate.
(b) To a person when, pursuant to the contract of sale, the
bottled sweetened beverages or concentrates are required to be
shipped and are shipped to a point outside of this state by the
distributor by means of any of the following:
(1) Facilities operated by the distributor.
(2) Delivery by the distributor to a carrier, customs broker, or
forwarding agent, whether hired by the purchaser or not, for shipment
to the out-of-state point.
(c) To a person where the state is prohibited from taxing that
sale, use, or consumption under the Constitution or laws of the
United States or under the Constitution of this state.
32605. The exemption certificate to be provided by a distributor
to another distributor as required by subdivision (a) of Section
32604 shall consist of a statement that is signed under penalty of
perjury by a person with authority to bind the distributor. The
certificate shall be dated and include the distributor's name and
account number. A new certificate shall be given if any information
in the current certificate changes. The certificate may be included
as part of any business records normally used to document a sale or
distribution.
32606. A distributor who has paid a tax, either directly to the
state or to another distributor registered under this part, and makes
a subsequent distribution of bottled sweetened beverages or
concentrate may claim a credit on its return for the period in which
the subsequent sale or distribution occurs.
32607. The board shall administer and collect the tax imposed by
this part pursuant to the Fee Collection Procedures Law (Part 30
(commencing with Section 55001)). For purposes of this part, the
references in the Fee Collection Procedures Law to "fee" shall
include the tax imposed by this part and references to "feepayer"
shall include a person required to pay the tax imposed by this part.
32608. (a) The board may prescribe, adopt, and enforce
regulations relating to the administration and enforcement of this
part, including, but not limited to, collections, reporting, refunds,
and appeals.
(b) The board may prescribe, adopt, and enforce any emergency
regulations as necessary to implement this part. Any emergency
regulation prescribed, adopted, or enforced pursuant to this section
shall be adopted in accordance with Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code, and, for purposes of that chapter, including Section 11349.6 of
the Government Code, the adoption of the regulation is an emergency
and shall be considered by the Office of Administrative Law as
necessary for the immediate preservation of the public peace, health
and safety, and general welfare.
32609. The taxes imposed by this part are due and payable to the
board on or before the last day of the month following each calendar
quarter.
32610. (a) On or before the last day of the month following each
calendar quarter of three months , a return for
the preceding calendar quarter shall be filed using electronic media
with the board.
(b) The board may prescribe those forms and reporting requirements
as are necessary to implement the tax, including, but not limited
to, information regarding the total amount of bottled sweetened
beverages and concentrate sold and the amount of tax due.
(c) Returns shall be authenticated in a form or pursuant to
methods as may be prescribed by the board.
32610.5. Every person required to pay the tax imposed under this
part shall register with the board. Every application for
registration shall be made upon a form prescribed by the board and
shall set forth the name under which the applicant transacts or
intends to transact business, the location of his or her place or
places of business, and such other information as the board may
require. An application for an account shall be authenticated in a
form or pursuant to methods as may be prescribed by the board.
32611. (a) There is hereby created a trust fund in the State
Treasury called the Children's Health Promotion Fund. The Children's
Health Promotion Fund shall consist of all taxes, interest,
penalties, and other amounts collected pursuant to this part, less
refunds and reimbursement to the board for expenses incurred in the
administration and collection of the tax.
(b) All moneys in the Children's Health Promotion Fund shall, upon
appropriation by the Legislature, be allocated for the purposes of
statewide childhood obesity prevention activities and programs as
follows:
(1) Twenty percent to the State Department of Public Health to
coordinate statewide childhood obesity prevention activities and to
fund state-level childhood obesity prevention and children's dental
programs. This funding shall support programs that use educational,
environmental, policy, and other public health approaches that
achieve the following goals: improve access to and consumption of
healthy, safe, and affordable foods and beverages; reduce access to
and consumption of calorie-dense, nutrient-poor foods; encourage
physical activity; decrease sedentary behavior; and raise awareness
about the importance of nutrition and physical activity to childhood
obesity prevention.
(2) Thirty-five percent for evidence-based
community-based childhood obesity prevention programs. This funding
shall support programs that use educational, environmental, policy,
and other public health approaches that achieve the following goals:
improve access to and consumption of healthy, safe, and affordable
foods and beverages; reduce access to and consumption of
calorie-dense, nutrient-poor foods; encourage physical activity;
decrease sedentary behavior; and raise awareness about the importance
of nutrition and physical activity to childhood obesity prevention.
The State Department of Public Health shall be responsible for the
distribution of these funds to local health departments that may
contract with community-based organizations and to
local health departments , with priority given to counties
that have the highest rates of childhood obesity.
(3) Ten percent to evidence-based prevention, early recognition,
monitoring, and weight management intervention activities in the
medical setting. The State Department of Public Health shall be
responsible for identifying activities and allocating these funds.
(4) Thirty-five percent to elementary and secondary schools for
educational, environmental, policy and other public health approaches
that promote nutrition and physical activity. The approaches funded
pursuant to this paragraph can include improving or building school
recreational facilities that are used for recess and physical
education; providing continuing education training for physical
education teachers; hiring qualified physical education teachers;
implementing Safe Routes to Schools programs; improving the quality
and nutrition of school breakfasts, lunches, and snacks; ensuring
free, clean drinking water access throughout the schoolday; and
incorporating practical nutrition education into the curriculum. The
Superintendent of Public Instruction is responsible for the
allocation and distribution of these funds.
(c) All moneys in the Children's Health Promotion Fund shall be
expended only for the purposes expressed in this chapter, and shall
be used only to supplement existing levels of service and not to
supplant current federal, state, or local funding for existing levels
of service.
(d) The State Public Health Officer and the Superintendent of
Public Instruction are hereby authorized to make such rules and
regulations, and provide such procedural measures, as shall bring
into effect the purposes of this section. The rules and regulations
may provide for specific programs to be funded consistent with the
allocation of funds set forth above.
32612. (a) On or before July 1, 2022, the University of
California or the California State University, as determined by the
State Department of Public Health, shall provide a report to the
Legislature and all relevant standing committees that examines the
process and outcome performance of the Sweetened Beverage Tax Law
that includes, but is not limited to, a review of how moneys in the
Children's Health Promotion Fund were allocated annually, annual and
longitudinal data on childhood obesity prevalence and incidence
rates, data on childhood diabetes and incidence rates, and
longitudinal information on sweetened beverage consumption rates
across the state population.
(b) Notwithstanding paragraphs (1) to (4), inclusive, of
subdivision (b) of Section 32611, ____ dollars ($____) shall, upon
appropriation by the Legislature from the Children's Health Promotion
Fund, be allocated to the State Department of Public Health for
allocation to either the University of California or the California
State University, as determined by the State Department of Public
Health, for the report required by subdivision (a).
(c) A report to the Legislature pursuant to subdivision (a) shall
be submitted in compliance with Section 9795 of the Government Code.
32612. 32613. This part shall
become operative on July 1, 2014.
32614. This part shall remain in effect only until July 1, 2024,
and as of that date is repealed, unless a later enacted statute, that
is enacted before July 1, 2024, deletes or extends that date.
SEC. 3. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.
