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AB-2100 Taxation: sweetened beverages: Pediatric Obesity Fund.(2009-2010)

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Amended  IN  Assembly  May 12, 2010
Amended  IN  Assembly  March 25, 2010

CALIFORNIA LEGISLATURE— 2009–2010 REGULAR SESSION

Assembly Bill
No. 2100

Introduced  by  Assembly Member Coto

February 18, 2010

An act to add Part 14.5 (commencing with Section 32600) to Division 2 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 2100, as amended, Coto. Taxation: sweetened beverages: Pediatric Obesity 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 January 1, 2011, impose a tax on every distributor, as defined, at the rate of one cent ($0.01) per teaspoon of added caloric sweetener in the bottled sweetened beverage or concentrate upon every person who makes the first sale in this state of bottled sweetened beverage or concentrate and on every person who uses or consumes, or places into a vending machine or retail stock, untaxed bottled sweetened beverage or concentrate, as provided sold or offered for sale to a retailer in this state, and on a retailer who sells bottled sweetened beverages or concentrate in this state to consumers on which the tax has not been paid by a distributor. This bill would exempt from the tax the first sale in this state of concentrate to a sweetened beverage manufacturer, as provided, and any sale, use, or consumption which in this state of bottled sweetened beverages or concentrate that the state is prohibited from taxing, as provided. 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.
The bill would require the board to deposit all taxes, penalties, and interest collected, less refund and administrative costs, in the Pediatric Obesity 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 Education for distribution of grants to eligible school districts for the purpose of employing a school nurse or health educator and creating a healthful diet and lifestyle plan for the school.
This bill would require the Director of Finance to transfer, an unspecified amount from the General Fund to the board, to implement the collection of the taxes imposed by this act, and would require that amount to be repaid by the board with interest from the taxes collected.
Because this bill would expand the application of the Fee Collection Procedures Law, the violation of which is a crime, it would impose a state-mandated local program.
This bill would make legislative findings and declarations relating to the consumption of sweetened beverages and obesity.
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.
This bill would result in a change in state taxes for the purpose of increasing state revenues 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.
This bill would take effect immediately as a tax levy, but its operative date would depend on its effective date.
Vote: 2/3   Appropriation: NOYES   Fiscal Committee: YES   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) Over 64 percent of adults in the United States are overweight and 17 percent of children and adolescents ages 2 to 19, inclusive, are overweight. Overweight Being overweight is a significant risk factor for the development of diabetes. Twenty-three percent of children and adults have diabetes and rates continue to explode.
(b) Currently, over 5.6 million adults in California, which equals 21.2 percent, are obese and an additional half million adolescents, which equals 14.2 percent, are overweight or obese. The costs of It is estimated that physical inactivity, obesity, and overweight costs being overweight cost California residents over $28 billion per year.
(c) An average 12-ounce serving of soda contains 10 teaspoons of sugar, whereas the United States Department of Agriculture recommends that a person eating a 2,200-calorie diet should consume no more than 12 teaspoons of refined sugar per day.
(d) There is an overwhelming link between obesity and the consumption of sweetened beverages. The average American consumes 278 additional more calories than they did in 1977. One hundred twenty of these calories can be attributed to sugar sweetened beverages.
(e) Children who frequently or excessively consume beverages high in sugar are at increased risk for dental caries.
(f) Untreated dental caries can lead to pain, infection, tooth loss and, in severe cases, even death. They 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.

(e)

(g) Adam Smith, in 1776, declared “Sugar, rum and tobacco are commodities which are nowhere necessities of life, which are become objects of almost universal consumption, and which are therefore extremely proper subjects of taxation.”

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)“Added sweetener” means any additive that enhances the sweetness of a beverage, including, but not limited to, added sugar, but does not include the natural sugar or sugars that are contained within the fruit juice that is a component of the beverage.

(b)

(a) “Beverage container” means any closed or sealed glass, metal, paper, plastic, or any other type of container regardless of the size or shape of the container.

(c)

(b) “Bottled sweetened beverage” means a sweetened beverage contained in a beverage container.
(c) “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 sweetener” excludes noncaloric sweeteners. “Caloric” means a substance that adds calories to the diet of a person who consumes that substance.
(d) “Concentrate” means a sweetened beverage syrup, simple syrup, powder, or base product for mixing, compounding, or making sweetened beverages.

(e)“Concentrate manufacturer” means any person that manufactures concentrate for sale to distributors, dealers, consumers, or others in this state.

(e) “Consumer” means a person who purchases a bottled sweetened beverage or concentrate for consumption and not for resale.
(f) “Distributor” means any person, including a manufacturer and wholesale dealer, who receives, stores, manufactures, bottles, or distributes bottled sweetened beverages or concentrate to retailers doing business in the state, whether or not that person also sells these products to consumers.

(f)

(g) “Milk” means natural liquid milk, regardless of animal source or butterfat content, natural milk concentrate, whether or not reconstituted, regardless of animal source or butterfat content, or dehydrated natural milk, whether or not reconstituted.

(g)

(h) “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.

(h)

(i) “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.

(i)

(j) “Nonalcoholic beverage” means all beverages not subject to tax under Part 14 (commencing with Section 32001).
(k) “Noncaloric sweetener” means any noncaloric substance suitable for human consumption that humans perceive as sweet and includes, without limitation, aspartame, saccharin, stevia, and sucralose. “Noncaloric” means a substance that does not add calories to the diet of a person who consumes the substance.
(l) “Person” means an individual, trust, firm, joint stock company, business concern, corporation, including, but not limited to, a government corporation, partnership, limited liability company, and association. “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.

(j)

(m) (1) “Powder” or “base product” means a mixture of ingredients in other than liquid form, used in making, mixing, or compounding sweetened beverages by mixing this product with water, ice, syrup, or simple syrup, fruits, vegetables, fruit juice, vegetable juice, or any other product suitable to make a sweetened beverage.
(2) “Powder” or “base product” does not include any of the following:
(A) Any product sold in powder or other nonliquid mixture form that is solely used in preparing coffee or tea.
(B) Any product sold in powder form for consumption by infants and which is commonly referred to as “infant formula.”
(C) Any product sold in powder form for use for weight reduction.
(D) Any product containing milk or milk products.
(E) Any frozen concentrate or freeze-dried concentrate to which only water is added to produce a sweetened beverage containing more than 10 percent natural fruit juice or more than 10 percent natural vegetable juice.
(F) Any powder or other base product that is sold and used for the purpose of an individual consumer mixing a sweetened beverage.
(n) “Retailer” means any person who sells in this state bottled sweetened beverages or concentrate to consumers whether or not that person is also a distributor as defined in this section.

(k)

(o) “Sale” means the transfer of title or possession for consideration in any manner or by any means whatever.

(l)

(p) “Simple syrup” means a mixture of sugar and water.

(m)

(q) (1) “Sweetened beverage” means any sweetened nonalcoholic beverage sold for human consumption that contains any added caloric sweetener 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 10 percent or less natural fruit juice or natural vegetable juice, and all other drinks and beverages commonly referred to as “soda,” “soda pop,” and “soft drinks.”
(2) “Sweetened beverage” does not include any of the following:
(A) Any nonalcoholic beverage sweetened entirely with artificial sweeteners that do not add calories to the beverage. noncaloric sweeteners.
(B) Any product sold in liquid form for consumption by infants, which is commonly referred to as “infant formula.”
(C) Any product sold in liquid form for use for weight reduction.
(D) Water, to which no natural sweeteners have been added.
(E) Any product containing milk or milk products.

(n)“Sweetened beverage manufacturer” means any person who bottles, cans, or otherwise fills a bottled sweetened beverage.

(o)

(r) “Syrup” means the liquid mixture of ingredients used in making, or mixing, mixing, or compounding sweetened beverages by mixing the syrup with water, simple syrup, ice, fruits, vegetables, fruit juice, vegetable juice, or any other product suitable to make a sweetened beverage.

(p)

(s) “Teaspoon” means 4.2 grams.

32602.(a)A tax is hereby imposed at the rate of one cent ($0.01) per teaspoon of added sweetener in a bottled sweetened beverage on every person who does the following:

(1)Makes the first sale in this state of a bottled sweetened beverage.

(2)Uses or consumes an untaxed bottled sweetened beverage in this state.

(3)Places in this state an untaxed bottled sweetened beverage in a vending machine or in retail stock for the purpose of selling the bottled sweetened beverage to consumers.

(b)A tax is hereby imposed at the rate of one cent ($0.01) per teaspoon of added sweetener in the concentrate on every person who does the following:

(1)Makes the first sale in this state of concentrate.

(2)Uses or consumes untaxed concentrate in this state.

(3)Places in this state untaxed concentrate in a vending machine or retail stock for the purpose of selling a sweetened beverage to consumers.

(c)There is exempt from the tax imposed under subdivision (b), the sale of untaxed concentrate to a sweetened beverage manufacturer, whose sale of the concentrate or the bottled sweetened concentrate is subject to tax under subdivision (a) or (b).

32602.
 (a) There is hereby imposed a tax on every distributor at the rate of one cent ($0.01) per teaspoon of added caloric sweetener in a bottled sweetened beverage or concentrate sold or offered for sale to a retailer in this state.
(b) A retailer who sells bottled sweetened beverages or concentrate in this state to a consumer, on which the tax imposed by this section has not been paid by a distributor, is liable for the tax imposed in subdivision (a) at the time of sale to a consumer.
(c) Every distributor subject to the tax imposed pursuant to subdivision (a) shall separately state the amount of tax due to the board by the distributor on the receipt, invoice, or other form of accounting of the transaction given to the retailer.

32603.
 There is exempt from the tax taxes imposed by this part, the sale, use, or consumption in this state of bottled sweetened beverage or concentrate 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.

32604.
 (a) The board shall administer and collect the tax taxes 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 taxes imposed by this part and references to “feepayer” shall include a person required to pay the any tax imposed by this part.

32605.Each person required to pay the tax shall prepare and

(b) (1) 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.
(2) 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.

32605.
 (a) Each 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 any other information as the board may require. An application for an account shall be authenticated in a form or pursuant to a method as may be prescribed by the board.
(b) Each person required to pay the tax shall prepare and file with the board a return using electronic media in the form prescribed by the board containing information as the board deems necessary or appropriate for the proper administration of this part. The return shall be filed on or before the last day of the calendar month following the calendar quarter to which it relates, together with a remittance payable to the board for the amount of tax due for that period. Returns shall be authenticated in a form or pursuant to a method as may be prescribed by the State Board of Equalization.

32606.
 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 added caloric sweetener, the total amount of bottled sweetened beverage drinks and concentrate sold, and the amount of tax due.

32607.

Every payment on a delinquent tax owed pursuant to this part shall be applied as follows:

(a)First, to any interest due on the tax.

(b)Second, to any penalty imposed by this part.

(c)Third, the balance, if any, to the tax due.

32608.
 The board shall, upon appropriation, be reimbursed for expenses incurred in the administration and collection of the tax imposed by this part.

32609.
 (a) There is hereby created a fund in the State Treasury called the Pediatric Obesity Fund. The Pediatric Obesity 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 Pediatric Obesity Fund shall, upon appropriation by the Legislature, be allocated to the Department of Education for distribution of grants to eligible school districts for the purpose of employing a school nurse or health educator and creating a healthful diet and lifestyle plan for the school.

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.
(a) The Director of Finance shall transfer, as a loan, up to ____ dollars ($____) from the General Fund to the State Board of Equalization, to implement the collection of the taxes imposed by this act.

SEC. 4.

 (b) Any loan made pursuant to subdivision (a) shall be repaid on or before ____, with interest at the pooled money investment rate, from taxes collected pursuant to this act.

SEC. 4.SEC. 5.

 This act provides for a tax levy within the meaning of Article IV of the Constitution and shall go into immediate effect. However, the provisions of this act shall become operative on January 1, 2011 the first day of the first calendar quarter commencing more than six months after the effective date of this act.