Sugar Sweetened Beverage Tax for Consumers
On Nov. 8, 2016, the residents of Boulder voted to approve a tax on sugar-sweetened beverage products distributed within the city. While the idea originated at a grassroots level, city staff dedicated efforts to clarify how best to administer the new tax once the ordinance passed.
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What Consumers Need to Know
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 which 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 presweetened 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.
Distributors are free to pass or not 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 two-cents-per-ounce. As a consumer, you may or may not see a rise in the cost of your beverage of choice. For example, diet soda is exempt as it does not have added sugar, the subject of this tax. However, a coffee drink containing syrups and added sugar may have a price increase.
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? The ballot measure defined that funds generated from the tax 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, with revenue generated from this tax, 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 targeted to the most at-risk community members, access to safe and clean drinking water, and physical activity.
The city is establishing an Health Equity Advisory Committee (HEAC) to ensure tax fund expenditures align with the intention of Ballot Issue 2H and to make funding recommendations. The HEAC will consist of community members knowledgeable about health equity and chronic disease issues associated with sugary drink consumption. This committee 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. Eligibility criteria and time commitment information was released earlier this year and applications were due by June 7, 2017 by 4:30 p.m.
The City of Boulder has also invited Requests for Proposals (RFPs) to fund existing 501(c)(3) nonprofit agencies, educational, or governmental entities which have the express purpose of promoting health and preventing diseases associated with sugary drink consumption . Applications were due by June 23, 2017 by 4:30 p.m.
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 (among the first cities to pass such a tax), as well as alongside other cities currently implementing similar taxes in Cook County, Illinois and Oakland and Albany, California. 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.