BILL NUMBER: SB 1520 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 29, 2002
AMENDED IN SENATE APRIL 17, 2002
AMENDED IN SENATE APRIL 4, 2002
INTRODUCED BY Senator Ortiz
(Coauthors: Senators Kuehl and Torlakson)
(Coauthors: Assembly Members Aroner, Jackson, and Koretz)
FEBRUARY 20, 2002
An act to add Part 14.5 (commencing with Section 33001)
to Division 2 of the Revenue and Taxation Code, relating to taxation,
to take effect immediately, tax levy. An act to
amend Section 49431 of the Education Code, relating to schools.
LEGISLATIVE COUNSEL'S DIGEST
SB 1520, as amended, Ortiz. Taxation: soda tax
Schools: pupil nutrition: carbonated beverages
.
Existing law prohibits the sale of carbonated beverages in middle
schools from 1/2 hour before the start of the schoolday until after
the end of the last lunch period.
This bill would instead prohibit the sale of carbonated beverages
to pupils in elementary schools commencing on January 1, 2004, to
pupils in middle or junior high schools commencing on January 1,
2005, and to pupils in high school commencing on January 1, 2007.
The Sales and Use Tax Law imposes a sales and use tax on the gross
receipts from the sale in this state of, and the storage, use, or
other consumption in this state of, tangible personal property based
on a specified percentage of the gross receipts from the sale of, or
the sales price of, that property.
This bill would impose a surtax upon every distributor,
manufacturer, or wholesale dealer at a rate of $2 per gallon of soft
drink syrup or simple syrup and $0.21 per gallon of bottled soft
drinks, and $0.21 per gallon of soft drink that may be produced from
powder, that is sold in this state. The revenues collected from the
surtax would be deposited in the California Child Health and
Achievement Fund, which the bill would create, for appropriation by
the Legislature to diminish the human and economic costs of obesity
in this state.
By imposing a new tax, this bill would result in a change in state
taxes for the purpose of increasing 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.
Vote: 2/3 majority . Appropriation:
no. Fiscal committee: yes no .
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Part 14.5 (commencing with Section 33001) is added to
Division 2 of the Revenue and Taxation Code, to read:
PART 14.5. CALIFORNIA SODA TAX
CHAPTER 1. GENERAL PROVISIONS AND DEFINITIONS
33001. This part shall be known and may be cited as the
California Childhood Obesity Act.
33002. The Legislature finds and declares as follows:
SECTION 1. This act shall be known and may be cited as the
California Childhood Obesity Prevention Act.
SEC. 2. The Legislature finds and declares as follows:
(a) In the past two decades obesity has doubled in children, and
tripled in adolescents. On average, 30 percent of California's
children are overweight, and in some school districts, anywhere from
40 to 50 percent of California's students are overweight. Only 2
percent of California's youth, ages 12 through 17 years, have eating
habits that meet national dietary recommendations. Only 23 percent
of students in grades 5, 7, and 9 are physically fit. Almost half of
the children and adolescents now diagnosed with diabetes have the
Type 2 form of the disease, which is strongly linked to obesity and
lack of exercise. One in four obese children have early signs of
Type 2 diabetes.
(b) Overweight and physical inactivity costs California an
estimated $24.6 billion annually, approximately seven hundred fifty
dollars ($750) per person--a cost that is expected to rise by another
32 percent by the year 2005. Poor nutrition and physical inactivity
account for more preventable deaths (28 percent) than anything other
than tobacco--more than AIDS, violence, car crashes, alcohol, and
drugs combined. The long-term impact of childhood obesity on
California's economy, and on our children's increased risk of death
from heart disease, cancer, stroke, and diabetes will be staggering.
Approximately 300,000 deaths in the United States per year are
currently associated with obesity and overweight; the total direct
and indirect costs attributed to overweight and obesity amounted to
$117 billion in the year 2000. Obesity is linked to a larger
increase of chronic health conditions and accounts for a
significantly higher amount of health expenditures than those
associated with smoking, heavy drinking, or poverty.
(c) Every additional daily serving of sugar-sweetened soda
increases a child's risk for obesity by 60 percent. Twenty years
ago, boys consumed more than twice as much milk as soft drinks, and
girls consumed 50 percent more milk than soft drinks. By 1996, both
boys and girls consumed twice as many sodas as milk. Soft drinks now
comprise the leading source of added sugar in a child's diet.
Teenage boys consume twice the recommended amount of sugar each day,
almost one-half of which (44 percent) comes from soft drinks. Teenage
girls consume almost three times the recommended amount of sugar, 40
percent of which comes from soft drinks.
(d) A study of 9th and 10th grade girls found that those who drank
colas were five times more likely to develop bone fractures, and
girls who drank other carbonated beverages were three times more
likely to suffer bone fractures than nonconsumers of carbonated
beverages. Decreased milk consumption means that children are no
longer getting required amounts of calcium in their diets. The
average teenage girl now consumes 40 percent less calcium than she
needs, putting her at high risk of osteoporosis in her later years.
(e) Lack of adequate funding has left schools to rely on soda
contracts and the sale of soda and other unhealthy foods to fund
vital afterschool and extracurricular activities, and to balance
limited school cafeteria and school physical education budgets.
Unlike virtually all other products, sweetened beverages have both
high calories and little or no nutritional value. In 1992 the
California electorate approved Proposition 163 repealing the snack
tax, a sales tax imposed on certain snack foods containing sugar
products, without repealing the existing sales tax imposed on soda.
Seven other states levy a tax on the sale of soda, many of which use
the revenue to pay for vital health-related programs.
33003. For purposes of this part:
SEC. 3. Section 49431 of the Education Code is amended to read:
49431. (a) At elementary and middle schools, and in those schools
participating in the pilot program created pursuant to Section
49433.7, the sale of all foods on school grounds shall be approved
for compliance with the nutrition standards in the section by the
person or persons responsible for implementing these provisions as
designated by the school district.
(b) (1) At elementary schools, the only food that may be sold to
pupils during breakfast and lunch periods is food that is sold as a
full meal. This paragraph does not prohibit the sale of fruit,
nonfried vegetables, legumes, beverages, dairy products, or grain
products, as individual food items if they meet the requirements set
forth in this subdivision.
(2) An individual food item sold to a pupil during morning or
afternoon breaks at elementary schools shall meet all of the
following standards:
(A) Not more than 35 percent of its total calories shall be from
fat. This subparagraph does not apply to the sale of nuts or seeds.
(B) Not more than 10 percent of its total calories shall be from
saturated fat.
(C) Not more than 35 percent of its total weight shall be composed
of sugar. This subparagraph does not apply to the sale of fruits or
vegetables.
(3) Regardless of the time of day water, milk, 100 percent fruit
juices, or fruit-based drinks that are composed of no less than 50
percent fruit juice and that have no added sweeteners are the only
beverages that may be sold to pupils at an elementary school.
(c) In middle schools, from one-half hour before the
start of the schoolday until after the end of the last lunch period,
no carbonated beverage shall be sold to pupils. (1)
Commencing on January 1, 2004, carbonated beverages may not be sold
to pupils on elementary school campuses.
(2) Commencing on January 1, 2005, carbonated beverages may not be
sold to pupils on middle and junior high school campuses.
(3) Commencing on January 1, 2007, carbonated beverages may not be
sold to pupils on high school campuses.
(d) At middle schools, vending machines that contain beverage
items that do not meet the requirements in this section shall remain
locked or be rendered inoperable until after the end of the last
lunch period.
(e) An elementary school may permit the sale of food items that do
not comply with subdivisions (a) to (f), inclusive, of this section
as part of a school fundraising event in any of the following
circumstances:
(1) By pupils of the school if the sale of those items takes place
off of school premises.
(2) By pupils of the school if the sale of those items takes place
at least one-half hour after the end of the schoolday.
(f) Notwithstanding Article 3 (commencing with Section 33050) of
Chapter 1 of Part 20, this section shall not be waived pursuant to
that article.
(g) Although a middle school is required to comply with those
provisions of this section applicable to middle schools, it may, in
addition, elect to apply for participation in the pilot program
pursuant to Section 49433.7.
(h) This section shall become operative on January 1, 2004.
School districts shall be required to comply with this section only
if funds are appropriated in the Budget Act of 2003 for the purposes
of providing support and technical assistance to school districts as
set forth in Section 49433.5, for the purposes of providing grants to
participating school districts as set forth in subdivision (c) of
Section 49433, and for the purposes of increasing meal reimbursements
as set forth in Section 49430.5. The State Department of Education
shall file a written statement with the Secretary of the Senate and
the Chief Clerk of the Assembly within 30 days after enactment of the
Budget Act of 2003 stating whether funds have been appropriated as
set forth in this subdivision and in Section 49430.5.
(a) "Bottle" means any closed or sealed glass, metal, paper,
plastic, or any other type of container regardless of the size or
shape of the container.
(b) "Bottled soft drink" means any complete, ready to consume,
nonalcoholic drink, whether carbonated or not, commonly referred to
as a soft drink, contained in any bottle.
(c) "Distributor, manufacturer, or wholesale dealer" means any
person who receives, stores, manufactures, bottles, or sells bottled
soft drinks, soft drink syrups, simple syrups, or powders, or base
products for mixing, compounding, or making soft drinks for direct
sale to retail dealers.
(d) "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.
(e) "Natural fruit juice" means the original liquid resulting from
the pressing of fruit, or 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.
(f) "Natural vegetable juice" means the original liquid resulting
from the pressing of vegetables, or 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.
(g) "Nonalcoholic beverage" means and includes all beverages not
subject to tax under Part 14 (commencing with Section 32001).
(h) "Place of business" means any place where soft drinks, syrups,
simple syrups, powder, or base products are manufactured or any
place where bottled soft drinks, soft drink syrup, simple syrup, soft
drink powder, or other soft drink base product, or any other item
taxed under this part is received.
(i) "Powder" or "other base" means a solid mixture of basic
ingredients used in making, mixing, or compounding soft drinks by
mixing powder or other base with water, ice, syrup, or simple syrup,
fruits, vegetables, fruit juice, vegetable juice, or any other
product suitable to make a complete soft drink.
(j) "Retailer" or "retail dealer" means any person, other than a
manufacturer, distributor, or wholesales who receives, stores, mixes,
compounds, or manufactures any soft drink and sells or otherwise
dispenses the same to the ultimate consumer.
(k) "Sale" means the transfer of title or possession for a
valuable consideration of tangible personal property regardless of
the manner by which the transfer is accomplished. If a retailer is
also acting as a wholesaler or distributor, the duty to report and
pay the tax imposed by this part arises when the property is
transferred to a retail store for sale to the ultimate consumer, as
reflected by the records of the taxpayer.
(l)"Simple syrup" means a mixture of sugar and water.
(m) "Soft drink" means any nonalcoholic, sweetened (excluding
artificially), beverage sold for human consumption including, but not
limited to, the following: sweetened soda water, ginger ale, all
drinks commonly referred to as cola, lime, lemon, lemon-lime, and
other flavored drinks, including any fruit or vegetable drink
containing 50 percent or less natural fruit or natural vegetable
juice, and all other drinks and beverages commonly referred to as
"soda," "soda pop," and "soft drinks."
(n) "Syrup" means the liquid mixture of basic ingredients used in
making, mixing, compounding soft drinks by mixing the syrup with
water, simple syrup, ice, fruits, vegetables, fruit juice, or any
other product suitable to make a completed soft drink.
33004. There is hereby levied and there shall be collected an
excise tax upon every distributor, manufacturer, or wholesale dealer,
calculated as follows:
(a) Two dollars ($2) per gallon for each gallon of soft drink
syrup or simple syrup sold or offered for direct sale in the State of
California to retail dealers.
(b) Twenty-one cents ($0.21) per gallon for each gallon of bottled
soft drink sold or offered for direct sale in the State of
California to retail dealers.
(c) Where a package or container or powder or other base product,
other than a syrup or simple syrup, is sold or offered for sale in
California, and the powder is for the purpose of producing a liquid
soft drink, then the tax on the sale of each package or container
shall be equal to twenty-one cents ($0.21) for each gallon of soft
drink that may be produced from each package or container by
following the manufacturer's directions. This tax applies when the
sale of the powder or other base is sold to a retailer for sale to
the ultimate consumer after the liquid soft drink is produced by the
retailer.
33005. The taxes imposed by Section 33004 shall be imposed on
every soft drink in the possession or under the control of every
manufacturer, dealer, and distributor on and after 12:01 a.m. on July
1, 2003, pursuant to rules promulgated by the State Board of
Equalization.
33006. There is hereby created a trust fund in the State Treasury
called the California Child Health and Achievement Fund. The
California Child Health and Achievement Fund shall consist of moneys
collected pursuant to the taxes imposed by Section 33004. All costs
to implement this part shall be paid from moneys deposited in the
California Child Health and Achievement Fund. All revenue to the
state derived from the tax on soft drinks as per this part, shall be
deposited into this fund.
33007. (a) All moneys deposited in the California Child Health
and Achievement Fund shall, upon appropriation by the Legislature, be
transferred to the Department of Health Services which shall
allocate the funds as follows:
(1) Twenty-five percent to school districts for the promotion of
nutrition and physical activity in elementary schools in order to
advance healthy eating and physical activity as part of a
comprehensive school health program, with priority given to school
districts with the highest percentage of students eligible for the
lunch program.
(2) Thirty percent for the funding of grants to school districts
for middle and high schools that opt to comply with the nutritional
standards established by the Pupil Nutrition, Health, and Achievement
Act of 2001 under Article 2.5 (commencing with Section 49430) of
Chapter 9 of Part 27 of the Education Code, with priority given to
school districts with the highest percentage of students eligible for
the lunch program. Schools are encouraged to use the funds for
afterschool programs and other activities currently funded through
the sale of soda and other high-fat and high-calorie foods on school
campuses. Any funds remaining unallocated in any given fiscal year
from this section shall be allocated to elementary schools as per
paragraph (1).
(3) Fifteen percent for state and local, community-based obesity
prevention programs, and other programs and scientific research
related to chronic disease, including cancer, with priority given to
low-income communities. This funding shall support programs that use
educational, environmental and policy approaches to reduce the
consumption of low-nutrient, high-calorie foods; increase the
consumption of nutritious, lower-calorie foods, especially fruits and
vegetables; increase daily physical activity; decrease physical
inactivity; and promote breastfeeding.
(4) Fifteen percent for public health programs that promote oral
health, including, but not limited to, grants for dental disease
prevention programs, assessment of oral health needs and resources,
capital equipment and operations and maintenance costs for local
community water projects, and development and expansion of community
dental clinics, with priority given to programs in low-income
communities.
(5) Fifteen percent for the Healthy Families Program for purposes
of, but not limited to, childhood obesity prevention and treatment.
(b) All moneys raised pursuant to taxes imposed by Section 33004
shall, upon appropriation by the Legislature, be expended only for
the purposes expressed in this part, and shall be used only to
supplement existing levels of service and not fund existing levels of
service. No moneys in the California Child Health and Achievement
Fund may be used to supplant state or local General Fund money for
any purpose.
33008. The following items shall be exempt from the tax levied by
this part:
(a) Syrups, simple syrups, powders, or base products, or soft
drinks sold to the United States government.
(b) Syrups, simple syrups, powders, or base products, or soft
drinks exported from the state by a distributor, wholesaler, or
manufacturer.
(c) Any powder or base product that is used in preparing coffee or
tea.
(d) Any frozen concentrate or freeze-dried concentrate to which
only water is added to produce a soft drink containing more than 10
percent natural fruit juice or natural vegetable juice.
(e) Any soft drink containing more than 10 percent natural fruit
juice or natural vegetable juice.
(f) Syrups, simple syrups, powders, or base products, or soft
drinks sold by one distributor, wholesaler, or manufacturer to
another distributor, wholesaler, or manufacturer who holds a license
issued by the director under the provisions of this part as a
distributor, wholesaler, or manufacturer, provided that the license
number of the distributor, wholesaler, or manufacturer to whom the
soft drink is sold is clearly shown on the invoice for the sale that
is claimed to be exempt. This exemption shall not apply to any sale
to a retailer.
(g) Any product, whether sold in liquid or powder form, that is
intended by the manufacturer for consumption by infants and that is
commonly referred to as "infant formula."
(h) Any powder or other base product that is intended by the
manufacturer to be sold and used for the purpose of domestically
mixing soft drinks by the ultimate consumer.
(i) Beverages sweetened with artificial sweeteners that do not add
calories to the beverage, including beverages commonly known as diet
sodas and diet soft drinks.
(j) Any product, whether sold in liquid or powder form, that is
intended by the manufacturer for use for weight reduction.
(k) Water, to which no natural sweeteners have been added.
(l) Any product containing milk or milk products.
SEC. 2. This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.