Five Things to Know About the Sugar-Sweetened Beverage Tax
Voter-approved tax started July 1, 2017
Residents of Boulder voted in 2016 to approve a tax on sugar-sweetened beverage products distributed within the city. While the idea originated at a grassroots level and was placed on the ballot as a result of citizen petitions, city staff has been working to clarify aspects of the tax and create systems to collect and distribute the funds. Here are five things to know about the tax now that it has taken effect:
It's a Tax on Distributors
The Sugar-Sweetened Beverage Tax is not a consumer sales tax. The SSB Tax, often nicknamed the “sugar tax” or “soda tax,” is NOT a sales tax charged directly to the consumer. Instead, this excise tax makes distributors of sugar-sweetened beverages pay a tax applied to the drinks they distribute within the City of Boulder. The drinks that are subject to the tax contain at least 5 grams of added caloric sweeteners (such as sugar and high-fructose corn syrup) per 12 fluid ounces. This definition includes products like soda, energy drinks and heavily pre-sweetened tea, as well as the syrups and powders used to produce them, such as the boxed syrup used to make fountain drinks. Certain drinks such as infant formula, milk products, alcoholic beverages and 100 percent natural fruit and/or 100 percent vegetable juice are exempt.
Prices for Impacted Drinks May Go Up
Consumers may see price increases in their favorite sugar-sweetened drinks. Distributors are free to pass the added cost of the SSB Tax on to retailers. Likewise, retailers may or may not pass the cost along to their consumers. The SSB Tax is not a one size-fits-all tax; however, it is charged at a rate of 2 cents per ounce. As a consumer, you might see a rise in the cost of your beverage of choice. For example, diet soda is exempt as it does not have added sugar. However, a flavored coffee drink containing syrups and added sugar may have a price increase.
Tax Revenue Must be Used to Improve Health Equity
Generated revenue must go toward items identified in the ballot measure. According to preliminary estimates, the tax is expected to generate roughly $1.5 million in 2017 and $3 million in 2018. But where will that money go? According to the ballot measure, funds generated from the tax must be used to improve health equity in Boulder through the support of health promotion, general wellness programs and chronic disease prevention. Additionally, the funds will cover the administrative cost of the tax. For 2017, the city hopes to improve health equity by initially investing in existing programs and then exploring innovative partnerships and programs. These efforts will focus on health promotion and chronic disease prevention efforts designed for community members most at risk, access to safe and clean drinking water, and physical activity.
Community Member Committee will Recommend Uses for Funds
A Health Equity Advisory Committee (HEAC) will recommend uses for funds. The city will establish an advisory committee consisting of community members knowledgeable about health equity and chronic disease issues associated with sugary drink consumption. The HEAC will help define outcomes and measurements of success for revenue, recommend existing programs for 2017 funding, identify future program spending and prioritization, and provide input on strategies to engage residents most affected by chronic disease and lack of access to health services.
Boulder is Among First Cities in U.S. to Implement the Tax
Boulder is one of the first U.S. cities to implement the tax. Boulder is among the first U.S. cities to implement such a per-ounce tax on sugar-sweetened beverages. We’re following closely in the steps, and learning from the experience, of Philadelphia and Berkeley, Calif., as well as Cook County, Ill., and Oakland and Albany, Calif. We’re the first to admit we’re learning as we go. City staff, along with the HEAC, will monitor administration of the tax and consider future revisions if significant issues arise.
See Sugar-Sweetened Beverage Tax for more information.
This story originally appeared in the June/July issue of the city's Community Newsletter.