Amendment #866 to H3600
Tiered Tax on Sugar Sweetened Beverages
Representatives Khan of Newton, Hecht of Watertown, Vega of Holyoke, Schmid of Westport, Keefe of Worcester, Farley-Bouvier of Pittsfield, Goldstein-Rose of Amherst, Tosado of Springfield and Williams of Springfield move to amend the bill by adding the following section:
"SECTION XXXX. The Massachusetts General Laws, as appearing in the 2014 Official Edition, are hereby amended by inserting after chapter 64N the following new chapter:-
Chapter 64O. SUGARY DRINK TAX
Section 1. Definitions.
(a) For the purposes of this section, the following words shall have the following meanings:
(1) "Beverage for medical use” means a beverage suitable for human consumption and manufactured for use as an oral nutritional therapy for persons who cannot absorb or metabolize dietary nutrients from food or beverages, or for use as an oral rehydration electrolyte solution for infants and children formulated to prevent or treat dehydration due to illness. “Beverage for medical use” shall also mean a “medical food” as defined in section 5(b)(3) of the Orphan Drug Act (21 U.S.C. 360ee(b)(3)); this Act defines medical food as “a food which is formulated to be consumed or administered internally under the supervision of a physician and which is intended for the specific dietary management of a disease or condition for which distinctive nutritional requirements, based on recognized scientific principles, are established by medical evaluation.” “Beverage for medical use” shall not include drinks commonly referred to as “sports drinks” or any other common names that are derivations thereof.
(2) “Bottle" 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.
(3) "Bottled sugary drink" means any sugary drink contained in a bottle that is ready for consumption without further processing such as, without limitation, dilution or carbonation.
(4) "Caloric sweetener" means any caloric substance suitable for human consumption that humans perceive as sweet and includes, without limitation, sucrose, fructose, glucose, fruit juice concentrate or other sugars. "Caloric sweetener" excludes non-caloric sweeteners. For purposes of this definition, "caloric" means a substance which adds calories to the diet of a person who consumes that substance.
(5) “Commissioner” means the commissioner of revenue and his or her authorized agents and employees.
(6) "Commonwealth” means the commonwealth of Massachusetts.
(7) "Consumer" means a person who purchases a sugary drink for consumption and not for sale to another.
(8) "Department" means the department of public health.
(9) "Distributor" means any person, including manufacturers and wholesale dealers, who receives, stores, manufactures, bottles and/or distributes bottled sugary drinks, syrups or powders, for sale to retailers doing business in the commonwealth, whether or not that person also sells such products to consumers.
(10) "Fund" means the Children’s Health Promotion Fund, established pursuant to section 5.
(11) “Milk” means natural liquid milk regardless of animal or plant source or butterfat content; natural milk concentrate, whether or not reconstituted; or dehydrated natural milk, whether or not reconstituted.
(12) "Natural fruit juice” means the original liquid resulting from the pressing of fruits, or the liquid resulting from the dilution with water of dehydrated natural fruit juice.
(13) “Natural vegetable juice" means the original liquid resulting from the pressing of vegetables, or the liquid resulting from the dilution with water of dehydrated natural vegetable juice.
(14) "Non-caloric sweetener" means any non-caloric substance suitable for human consumption that humans perceive as sweet and includes, without limitation, aspartame, acesulfame-K, neotame, saccharin, sucralose and stevia. "Non-caloric sweetener" excludes caloric sweeteners. For purposes of this definition, "non-caloric" means a substance that contains fewer than 5 calories per serving.
(15) "Person" means any natural person, partnership, cooperative association, limited liability company, corporation, personal representative, receiver, trustee, assignee or any other legal entity.
(16) "Place of business" means any place where sugary drinks, syrups or powders are manufactured or received for sale in the commonwealth.
(17) "Powder" means any solid mixture of ingredients used in making, mixing, or compounding sugary drinks by mixing the powder with any one or more other ingredients, including without limitation water, ice, syrup, simple syrup, fruits, vegetables, fruit juice, vegetable juice, carbonation or other gas.
(18) "Retailer" means any person who sells or otherwise dispenses in the commonwealth a sugary drink to a consumer whether or not that person is also a distributor as defined in this section.
(19) "Sale" means the transfer of title or possession for valuable consideration regardless of the manner by which the transfer is completed.
(20) "Sugary drink" means any nonalcoholic beverage, carbonated or noncarbonated, which is intended for human consumption and contains any added caloric sweetener. As used in this definition, "nonalcoholic beverage" means any beverage that contains less than one-half of one percent alcohol per volume.
(21) "Syrup" means a liquid mixture of ingredients used in making, mixing, or compounding sugary drinks using one or more other ingredients including, without limitation, water, ice, a powder, simple syrup, fruits, vegetables, fruit juice, vegetable juice, carbonation or other gas.
(22) “Water”, means no-calorie, and non-flavored or flavored with natural fruit essence or natural flavor. The source of the water may be artesian, mineral, spring or well. “Water” may be carbonated, still, distilled or purified, including distilled, demineralized, deionized or reverse osmosis.
Section 2. Tax imposed.
(a) There is hereby imposed an excise tax on every distributor for the privilege of selling the products governed by this chapter in the commonwealth, calculated as follows:
(1) The tax shall be calculated using the following tiered system.
(i.) Beverages with less than 5 grams of sugar per 12 fluid ounces will not be taxed.
(ii.) Beverages with 5 grams or more but less than 20 grams of sugar per 12 fluid ounces will be taxed at a rate of $0.01 per ounce.
(iii.) Beverages with 20 grams of sugar or more per 12 fluid ounces will be taxed at a rate of $0.02 per ounce.
(2) Syrups and powders sold or offered for sale to a retailer for sale in the State to a consumer, either as syrup or powder or as a sugary drink derived from that syrup or powder, are taxable. Syrups and powders shall be taxed using the following tiered system:
(i.) If the beverages made from the syrup or powder have less than 5 grams of sugar per 12 fluid ounces, the syrup or powder will not be taxed.
(ii.) If the beverages made from the syrup or powder have 5 grams or more but less than 20 grams of sugar per 12 fluid ounces, the syrup or powder will be taxed at a rate equal to $0.01 per ounce for each gallon of sugary drink produced from that syrup or powder.
(iii.) If the beverages made from the syrup or powder have 20 grams of sugar or more per 12 fluid ounces, the syrup or powder will be taxed at a rate equal to $0.02 per ounce for each gallon of sugary drink produced from that syrup or powder.
For purposes of calculating the tax, the volume of sugary drink produced from syrups or powders shall be the larger of (i) the largest volume resulting from use of the syrups or powders according to any manufacturer’s instructions, or (ii) the volume actually produced by the retailer, as reasonably determined by the commissioner;
(3) The tax amounts set forth in this section shall be adjusted annually by the commissioner in proportion with the Consumer Price Index: All Urban Consumers for All Items for the Northeast Region Statistical Area as reported by the United States Bureau of Labor Statistics or any successor to that index.
(4) Manufacturers, bottlers, wholesalers or distributors shall add the amount of the tax imposed by this section to the retail price of sugary drinks.
(b) A retailer who sells bottled sugary drinks, syrups, or powders in the commonwealth 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 subsection (a) at the point of sale to a consumer.
(c) The taxes imposed by this section are in addition to any other taxes that may apply to persons or products subject to this chapter.
Section 3. Report of Sales and Tax Remittances.
Any distributor or retailer liable for the tax imposed by this chapter shall, on or before the last day of March, June, October, and December of each year, return to the commissioner under oath of a person with legal authority to bind the distributor or retailer, a statement containing his or her name and place of business, the quantity of sugary drinks, syrups and powders subject to the excise tax imposed by this chapter sold or offered for sale in the 3 months immediately preceding the month in which the report is due, and any other information required by the commissioner, along with the tax due.
Section 4. Records of Distributors
Every distributor, and every retailer subject to this chapter, shall maintain for not less than 2 years accurate records, showing all transactions that gave rise, or may have given rise, to tax liability under this chapter. Such records are subject to inspection by the commissioner at all reasonable times during normal business hours.
Section 5. Exemptions.
(a) The following shall be exempt from the tax imposed by this chapter:
(1) Bottled sugary drinks, syrups, and powders sold to the United States Government and American Indian Tribal Governments;
(2) Bottled sugary drinks, syrups, and powders sold by a distributor to another distributor that holds a permit issued pursuant to this chapter if the sales invoice clearly indicates that the sale is exempt. If the sale is to a person who is both a distributor and a retailer, the sale shall also be tax exempt and the tax shall be paid when the purchasing distributor or retailer resells the product to a retailer or a consumer. This exemption does not apply to any other sale to a retailer;
(3) Beverages sweetened solely with non-caloric sweeteners;
(4) Beverages consisting of 100 per cent natural fruit or vegetable juice with no added caloric sweetener;
(5) Beverages in which milk, or soy, rice or similar milk substitute, is the primary ingredient or the first listed ingredient on the label of the beverage;
(6) Coffee or tea without added caloric sweetener;
(7) Infant formula;
(8) Beverages for medical use;
(9) Water without any caloric sweeteners.
Section 6. Unpaid Taxes and Debt.
All taxes imposed under the provisions of this chapter remaining due and unpaid shall constitute a debt to the commonwealth, which may be collected from the person owing same by suit or otherwise.
Section 7. Records of commissioner.
At the end of each month, the auditor of the commonwealth shall carefully check the books and records of the commissioner and his accounts with any bank or banks, and shall verify the amounts collected pursuant to this chapter and paid into the Children’s Health Promotion Fund. Any duty herein required of the auditor of the commonwealth may be performed by any duly trained clerk in his office, designated by the auditor of the commonwealth for that purpose.
Section 8. Exercise of Powers and Duties.
Whenever in this chapter any reference is made to any power or duty of the commissioner, the reference is construed to mean that the power or duty shall be exercised by the commissioner, under the supervision and direction of the commissioner.
Section 9. Rules and Regulations.
The commissioner is hereby empowered to make such rules and regulations, and provide such procedural measures, in cooperation with the auditor of the commonwealth, as may be reasonably necessary to accomplish the purposes of this chapter.
Section 10. Severability.
If any provision of this chapter, any rule or regulation made under this chapter, or the application of this chapter to any person or circumstance is held invalid by any court of competent jurisdiction, the remainder of the chapter, rule, or regulation, and the application of the provision to other persons or circumstances shall not be affected. The invalidity of any section or sections or parts of any section of this chapter shall not affect the validity of the remainder of the chapter.
SECTION XXXX. The Massachusetts General Laws, as appearing in the 2014 Official Edition, are hereby amended by inserting after Section 2I of Chapter 111 the following new chapter:-
Section 2J. CHILDRENS HEALTH PROMOTION FUND
(a) There shall be established and set up on the books of the commonwealth a separate fund to be known as the Children’s Health Promotion Fund. The department of public health shall administer the fund. The fund shall consist of revenues from the commonwealth generated by the tax imposed by Chapter 64O, section 2. The fund shall be expended first for the implementation, administration, and enforcement of Chapter 64O. Unexpended balances shall be allocated in a proportion to be determined by the department of public health. Qualifying programs funded under Chapter 64O shall include but not be limited to
(i.) A municipal grant program for the creation and improvement of water fountains, improvement of water quality, and increasing water access in schools and municipal parks and facilities.
(ii.) Funding for the Prevention and Wellness Trust Fund established in section 2G of chapter 111.
(iii.) A municipal grant program for the fluoridation of public water supplies.
(iv) Funding of Mass in Motion as funded in item 4513-1111 of section 2 of chapter 133 of the acts of 2016.
(vi.) (vii.) Other evidence-based methods of improving children’s health and wellness with the focus in low income and moderate income communities.
(vii.) Other evidence-based methods of improving children’s health and wellness."
Amendment #866 to H3600
Tiered Tax on Sugar Sweetened Beverages
Christine P. Barber
Michelle M. DuBois