BILL ANALYSIS                                                                                                                                                                                                    Ó




                     SENATE GOVERNANCE & FINANCE COMMITTEE
                            Senator Lois Wolk, Chair
          

          BILL NO:  SB 622                      HEARING:  4/24/13
          AUTHOR:  Monning                      FISCAL:  Yes
          VERSION:  4/17/13                     TAX LEVY:  No
          CONSULTANT:  Lui                      

                             SWEETENED BEVERAGE TAX
          

          Imposes an excise tax of $0.01 per fluid ounce on bottled  
          sugar sweetened beverages and concentrates.  Establishes  
          the Children's Health Promotion Fund. 


                           Background and Existing Law  

          State and local sales and use taxes are imposed on the sale  
          or transfer of tangible personal property.  The total  
          combined sales and use tax rates range from 7.5% to 10%  
          based on the location of the sale.  Currently, state law  
          exempts the sale, storage, use, or consumption of food  
          products, including fruit juices, vegetable juices, bottled  
          water, and snack foods, from the sales and use tax.   
          Carbonated beverages are not exempt.  No other Board of  
          Equalization (BOE)-administered program imposes a tax or  
          fee on nonalcoholic sweetened beverages.

          In efforts to prevent childhood obesity, the Legislature  
          enacted a series of policies that regulate the types of  
          sweetened beverages available and amount of milk fat  
          content in beverages served in licensed child care  
          facilities (AB 2084, Brownley, 2010), as well as when fruit  
          and vegetable-based drinks, non-sweetened water, and  
          specified milk beverages may be sold in schools (SB 677,  
          Ortiz, 2003; SB 965, Escutia, 2005).  Seven other states --  
          Hawaii, Mississippi, Oregon, Rhode Island, Texas, Vermont,  
          and West Virginia -- have introduced similar measures as SB  
          622 for this legislative session.  None have been enacted. 


                                   Proposed Law  

          Senate Bill 622 establishes the Sweetened Beverage Tax Law,  
          which imposes an excise tax, at a rate of one cent per  
          fluid ounce of added caloric sweetener in a bottled  





          SB 622 -- 4/17/13  -- PageB

          sweetened beverage or concentrate, on every distributor for  
          distributing bottled sweetened beverages and concentrates  
          in the state.  The Board of Equalization administers and  
          collects the fee and deposits all taxes, penalties, and  
          interest collected under the law in the Children's Health  
          Promotion Fund.  SB 622 specifies:
               I.  How the excise tax is calculated. 
               II.  Who is exempt from the excise tax, and exemption  
          procedures.
               III.  How the Board of Equalization will administer  
          and collect the tax.
               IV.  How the Legislature must allocate the Children's  
          Health Promotion 
               Fund.

          I.   Excise tax  .  SB 622 imposes an excise tax on bottled  
          sweetened beverages and concentrates in the state, in the  
          following formula:
                 One cent ($0.01) per fluid ounce on bottled  
               sweetened beverages,  and  
                 One cent ($0.01) per fluid ounce of sweetened  
               beverage produced from concentrate, based on the  
               largest volume resulting from the concentrate's use  
               according to any manufacturer's instructions. 

          A distributor must include on each receipt, invoice, or  
          other form of accounting for the bottled sweetened  
          beverages or concentrate's distribution, the following: 
                 The distributor's name and address;
                 The purchaser's name and address;
                 The date of sale and invoice number; 
                 The kind, quantity, size, and capacity of packages  
               of bottled sweetened beverages, sweetened beverages,  
               or concentrate; 
                 The amount of excise tax due to the BOE from the  
               distributor;  and  ,
                 Any other information required by the BOE. 
          
          SB 622 requires that the taxes are due and payable to the  
          BOE on or before the last day of the month after each  
          quarterly period. 
          
          II.   Exemption and credit  .  To prevent double-taxation and  
          taxation on sales shipped out-of-state, Senate Bill 622  
          provides the following exemptions to the tax by a  
          distributor to:
                 A distributor registered with the BOE, as supported  






          SB 622 -- 4/17/13  -- PageC

               by a completed exemption certificate;
                  o         The exemption certificate must include a  
                    statement signed under penalty of perjury by a  
                    person authorized to bind the distributor.  The  
                    certificate must be dated, include the  
                    distributor's name and account number.  A new  
                    certificate must be given if any information in  
                    the current certificate changes.  The certificate  
                    may be included as part of business records used  
                    to document a sale or distribution.  
                 A person when the bottled sweetened beverages or  
               concentrate are required to be shipped outside the  
               state by the distributor by:
                  o         Distributor-operated facilities,  or  
                  o         Delivery to a carrier, customs broker, or  
                    forwarding agency, for shipment out-of-state.
                 A person where the state is prohibited from taxing  
               that sale, use, or consumption under the state  
               constitution, U.S. laws, or U.S. Constitution. 

          SB 622 also provides that a distributor who has a paid an  
          excise tax, either directly to California or another  
          registered distributor, and makes a subsequent distribution  
          of bottled sweetened beverages or concentrate may claim a  
          credit on its return for the period when that subsequent  
          sale or distribution occurs. 

          III.   Board of Equalization's administration  .  Senate Bill  
          622 requires the Board of Equalization (BOE) to administer  
          and collect the tax according to the Fee Collection  
          Procedures Law in state statute.  The bill clarifies  
          definitions in the Fee Collection Procedures Law, as  
          applied to the bill:
                 "Fee" means the tax imposed by the Sweetened  
               Beverage Tax Law.
                 "Feepayer" means a person required to pay the tax  
               as imposed by the Sweetened Beverage Tax Law.

          SB 622 authorizes the BOE to prescribe, adopt, and enforce  
          regulations, including emergency regulations as necessary,  
          related to the Sweetened Beverage Tax Law's administration  
          and enforcement, including: collections, reporting,  
          refunds, and appeals.  Any emergency regulation must be  
          adopted according to state law, and the Office of  
          Administrate Law must consider the regulation as necessary  
          for the immediate preservation of the public peace, health,  
          safety, and general welfare. 






          SB 622 -- 4/17/13  -- PageD


          SB 622 requires that on or before the last day of the month  
          following each quarterly calendar quarter of three month, a  
          distributor must file return for the preceding calendar  
          quarter must be filed using electronic media.  Taxes under  
          the Sweetened Beverage Tax Law are due on or before the  
          last day of each month following each calendar quarter.

          The bill authorizes the BOE to prescribe forms and  
          reporting requirements, including information on the total  
          amount of bottled sweetened beverages and concentrate sold  
          and the amount of tax due.  The bill requires the BOE to  
          authenticate returns. 

          SB 622 requires every person, who must pay the excise tax,  
          to register with the BOE.  Every registration application  
          must include the name under which the applicant transacts  
          or intends to transact business, the location of the places  
          of business, and other information as the BOE may require.   
          The bill requires the BOE to also authenticate an  
          application. 
          
          IV.   Children's Health Promotion Fund  .  Senate Bill 622  
          establishes the Children's Health Promotion Fund in the  
          state treasury.  The Fund consists of all taxes, interest,  
          penalties, and other amounts collected under the Sweetened  
          Beverage Tax Law -- less refunds and reimbursement to the  
          BOE for its administrative and tax collection expenses.   
          The bill provides, upon the Legislature's appropriation,  
          allocations for statewide childhood obesity prevention  
          activities and programs, specifically:
                 20% to the California Department of Public Health  
               (CDPH) to coordinate and fund statewide childhood  
               obesity prevention activities and children's dental  
               programs;
                 35% for community-based childhood obesity  
               prevention programs;
                  o         CDPH must be responsible for distributing  
                    these funds to community-based organization and  
                    local health departments, with priority to  
                    counties that have the highest rates of childhood  
                    obesity.
                 10% to evidence-based prevention, early  
               recognition, monitoring, and weight management  
               intervention activities in the medical setting;
                  o         CDPH is responsible for identifying  
                    activities and allocating these funds.






          SB 622 -- 4/17/13  -- PageE

                 35% to elementary and secondary schools for  
               approaches that promote nutrition and physical  
               activity, like improving recreational facilities used  
               for recess, hiring qualified physical education  
               teachers,  implementing Safe Routes to Schools  
               programs, improving the quality and nutrition of  
               school meals, and incorporating nutrition education  
               into curriculum
                  o         The Superintendent of Public Instruction  
                    is responsible for these funds' allocation and  
                    distribution.

          SB 622 requires that funds in the Children's Health  
          Promotion Fund be expended only for purposes specified in  
          the Sweetened Beverage Tax Law and to supplement existing  
          levels of service.  The bill prohibits any moneys from the  
          Fund from supplanting current federal, state, or local  
          funding for existing levels of service.   
           
           The bill authorizes the State Public Health Officer and  
          Superintended of Public Instruction to make rules and  
          regulations, which may provide specific program to be  
          funded, to implement the fund allocation. 

           Definitions  .  SB 622 provides the following definitions: 
                 "Beverage container" means any closed or sealed  
               container, of any size or shape, including but not  
               limited to glass, metal, plastic, or other material or  
               combination.
                 "Bottled sweetened beverage" means a sweetened  
               beverage contained in a beverage container.
                 "Beverage dispensing machine" means a device that  
               mixes concentrate with other ingredients and dispenses  
               the resulting mixture into an open container as a  
               ready-to-drink beverage.
                 "Caloric sweetener" means any caloric substance  
               suitable for consumption that humans perceive as  
               sweet, including but not limited to sucrose, fructose,  
               high fructose corn sweetener, glucose, other sugars,  
               and fruit juice concentrates.
                 "Caloric" means a substance that adds calories to  
               the diet of a person who consumes that substance.
                 "Concentrate" means a syrup, powder, or base  
               product used for mixing, compounding, or making  
               sweetened beverages in a dispensing machine.   
               Concentrate does  not  include any of the following:
                  o         Any product used solely in coffee or tea  






          SB 622 -- 4/17/13  -- PageF

                    preparation;
                  o         Any product for infant consumption, known  
                    as "infant formula;"
                  o         Any product for weight reduction;
                  o         Milk or milk products;
                  o         Any frozen concentrate or freeze-dried  
                    concentrate to which water is added to produce a  
                    sweetened beverage containing more than 50%  
                    natural fruit juice or more than 50% natural  
                    vegetable juice or more than 50% combined natural  
                    fruit juice and natural vegetable juice;
                  o         Any product sold and intended for an  
                    individual consumer mixing a sweetened beverage;
                  o         Medical food, as defined in state law and  
                    meets the definition under the federal Food,  
                    Drug, and Cosmetic Act;  and  ,
                  o         Any product to which no caloric  
                    sweeteners have been added.
                 "Consumer" is a person who purchases a bottled  
               sweetened beverage or concentrate for a non-resale  
               purpose in the ordinary course of business;
                 "Distribution" means:
                  o         The sale of bottled sweetened beverages  
                    or concentrate to a retailer. 
                  o         The receipt of untaxed bottled sweetened  
                    beverages or concentrate from an unregistered,  
                    out-of-state distributor by a retailer.
                  o         The retail sale of untaxed bottle  
                    sweetened beverages, sweetened beverages, or  
                    concentrate in California.
                  o         The use or consumption, as defined, of  
                    untaxed bottled sweetened beverages or  
                    concentrate in California by a distributor or  
                    retailor.  
                 "Distributor" means any person who distributes  
               bottled sweetened beverages, sweetened beverages, or  
               concentrates in California, whether or not the person  
               also sells products to consumers.
                 "Milk" means natural liquid milk, regardless of  
               animal source, plant source, butterfat content,  
               natural milk concentrate, or dehydrated natural milk,  
               reconstituted or not.
                 "Natural fruit juice" means the original liquid  
               from the fruit pressing, the reconstitution of natural  
               fruit juice concentrate, or the rehydration of natural  
               fruit juice. 
                 "Natural vegetable juice" means the liquid  






          SB 622 -- 4/17/13  -- PageG

               resulting from pressing vegetables, the reconstitution  
               of natural vegetable juice concentrate, or the  
               rehydration of natural vegetable juice.
                 "Nonalcoholic beverage" means any beverage not  
               subject to the Alcoholic Beverage Tax, like beer,  
               wine, or distilled spirits.
                 "Person" means an individual, trust, firm, joint  
               stock company, business concern, business trust,  
               receiver, trustee, syndicate, social club, fraternal  
               organization, estate, corporation, including a  
               government corporation, partnership, limited liability  
               company, and association or any other group or  
               combination acting as a unit.  "Person" also includes  
               any city, county, city and county, district,  
               commission, California, or any department, agency, or  
               political subdivision, any interstate body, and the  
               United States and its agencies and instrumentalities,  
               as permitted by law.
                 "Powder" or "base product" means a solid or liquid  
               mixture of ingredients with added caloric sweetener  
               used in making, mixing, or compounding sweetened  
               beverages by mixing powder or the base product with  
               other ingredients like water, ice, syrup, simple syrup  
               (a mixture of sugar and water), fruits vegetables,  
               carbonation, or other gas.
                 "Retail sale" is the sale of sweetened beverages to  
               a consumer.
                 "Retailer" means any person who sells sweetened  
               beverages to a consumer in California.
                 "Sale" means the transfer of title or possession  
               for consideration.
                 "Simple syrup" means a mixture of sugar and water.
                 A "sweetened beverage" means any sweetened  
               nonalcoholic beverage sold for human consumption that  
               has caloric sweeteners and contains more than 25  
               calories per 12 ounces, including soda water, ginger  
               ale, root beer, beverages referred to as cola, lime,  
               lemon, lemon-lime, and other flavored beverages  
               including any fruit or vegetable beverage containing  
               less than 50% natural fruit or vegetable juice; and,  
               all other drinks referred to as "soda," "soda pop,"  
               "soft drinks," "sports drinks," "energy drinks,"   
               "juice drinks," "ice teas," and "vitamin fortified  
               waters." A sweetened beverage does  not  include any of  
               the following:
                  o         Any product sold in liquid form for  
                    infant consumption, known as "infant formula" or  






          SB 622 -- 4/17/13  -- PageH

                    any product whose purpose is infant rehydration. 
                  o         Any product sold in liquid form for  
                    weight production;
                  o         Water with no added caloric sweeteners;
                  o         Milk or milk products;
                  o         Medical food;  and  ,
                  o         Any sweetened beverage containing more  
                    than 50% of natural fruit or natural vegetable  
                    juice.
                 "Syrup" means the liquid mixture used in making,  
               mixing, or compounding sweetened beverages using  
               ingredients like water, ice, powder, simple syrup,  
               fruits, vegetables, fruit or vegetable juice,  
               carbonation, or other case.

           Operative date  .  SB 622 will become operative on July 1,  
          2014.

           Mandate  .  The California Constitution provides that  
          reimbursement may be provided for a new or higher level of  
          service.  SB 622 provides that no reimbursement is  
          necessary because a local agency or school district's costs  
          are incurred because of a new crime of infraction. 

           Findings and declarations  .  SB 622 makes findings and  
          declarations to support its purpose. 
                                         

                              State Revenue Impact
           
               According to the Board of Equalization's preliminary  
          figures, a one-cent excise tax on sweetened beverages would  
          result in revenues of  $2.623 billion in 2014-15,and $2.717  
          billion in FY 2015-16.  In addition to excise tax, the  
          additional estimated sales tax revenues are $ 135.4 million  
          in 2014-15, and $140.2 million in 2015-16. 


                                     Comments  

          1.   Purpose of the bill  .  In 2009, Americans consumed 13.8  
          billion gallons of sugar-sweetened beverages (SSB).  That's  
          nearly 45 gallons per capita annually of soda, fruit punch,  
          sweetened teas, sports drinks, and other beverages with  
          added caloric sweeteners.2   Overweight, obesity, and  
          physical inactivity cost the state of California an  
          estimated $52 billion annually in health care costs and  






          SB 622 -- 4/17/13  -- PageI

          lost productivity.<1> An excess of calorie-dense but  
          nutrient poor foods in the market, high prices of fresh  
          produce, and increased consumption of non-satiating SSBs  
          have contributed to the obesity epidemic among adults and  
          children.  Academic studies find that raising the price of  
          a soda by twenty cents would reduce net caloric intake,  
          translating to weight loss and reduced obesity prevalence  
          among adults and children's at-risk-of-overweight  
          prevalence.<2>  Soft drinks were the single largest  
          contributor to energy intake during the last decade<3>, and  
          soft drink consumption increased by almost 500% during the  
          past 50 years<4>.  By levying an excise tax, SB 662  
          generates $2.62 billion in revenue that will directly fund  
          obesity prevention services, physical activity programs,  
          and nutrition education.  Proponents of a SSB tax find a  
          parallel to tobacco taxes, which contributed to reduced  
          smoking rates.  Public health advocates believe that  
          taxation will help reduce SSB consumption, and in turn,  
          reduce health care costs.  Research estimates that SSB tax  
          would reduce the incidence type II diabetes by 2.6% and  
          obesity prevalence by 1.5%.  These percentage reductions  
          would result in 95,000 fewer instance s of coronary heart  
          disease, 8,000 fewer strokes, and 26,000 fewer premature  
          deaths across the nation.<5>  Epidemiological research  
          shows the case for assessing an excise tax: the societal  
          -------------------------
          <1> Clayton, S. California School Health Centers  
          Association. 17 April 2013.  
          Silva, C. Latino Coalition for  Health California. 9 April  
          2013.
          <2> Smith, T.A., Lin, B., & Lee, J. United States  
          Department of Agriculture, Economic Research Service 100  
          (2010). Taxing caloric sweetened beverages: Potential  
          effects on beverage consumption, calorie intake, ERR-100
          <3> Block, G. (2004). "Foods Contributing to Energy Intake  
          in the US: Data from NHANES III and 
          NHANES 1999-2000." Journal of Food Composition and  
          Analysis, 17: 439-447
          <4> Fletcher, J.M., Fisvold, D.E., & Tefft, N. The effects  
          of soft drink taxes on child and adolescent consumption and  
          weight outcomes [Internet]. [cited 17 April 2013].  
          Available from:  
          http://www.bates.edu/economics/files/2010/05/fletcher_frisvo 
          ld_tefft_2011_JPE.pdf  
          <5> Wang, Y. C., Coxon, P., Shen, Y., Goldman, L., &  
          Bibbins-Domingo, K. (n.d.). A penny-per-ounce tax on  
          sugar-sweetened beverages would cut health and cost burdens  
          of diabetes . (2012). Health Affairs, 31(1), 199-207.





          SB 622 -- 4/17/13  -- PageJ

          costs, like lost productivity and health care costs of  
          obesity are linked with sweetened beverages but not paid  
          for by the consumer, representing an externality not  
          accounted in the price system.  SB 662 attempts to correct  
          this market failure by taxing sweetened beverages at a  
          price to account for the societal costs.

          2.   Implications  .  SB 662 would impact more than 350  
          bottled and fountain beverages in California, including  
          traditional sodas, sweetened iced teas, fruit drinks,  
          sports drinks, and energy drinks.  The excise tax would add  
          $0.72 per six-pack, $1.44 per 12-pack, and $2.88 per case  
          of 12 ounce cans.  With the five cent California Redemption  
          Value (CRV) deposit, a six-pack's additional cost would be  
          $1.02, $2.04 per 12-pack, and $4.08 per case.<6>    
          Opponents to SB 662 state that the beverage industry  
          responded to consumer demand for healthier alternatives  
          with offerings of diet beverages and other low-calorie  
          sweetened options.  Further, they argue that a SSB tax is  
          regressive.  Low-income households purchase more  
          sugar-sweetened beverages than higher-income households.4    
          Specifically, lower income households spend a larger  
          proportion of their home beverage purchases on sugar  
          sweetened beverages.<7>  Enacting additional taxes on  
          sweetened beverages would depress demand and could lead to  
          3,600 jobs losses for beverage bottlers and producers,  
          14,700 jobs across wholesalers and distributors, and 6,900  
          jobs from linked industries, like truck fleet operators,  
          fuel dealers, and finance professionals.6  

          3.   Unintended consequences  .  If SB 662 is enacted,  
                                                                  distributors and retailers will adjust their behavior to  
          account for the tax.  They will normalize the cost of the  
          additional tax and spread it evenly across all products,  
          regardless of if the beverage has added caloric sweetener  
          or not.  This means that the tax would be applied to  
          beverages not subject to the tax, like non-sweetened water.  
           Beverage distributors can also adjust wholesale prices to  
          recover the tax, and retailers will likely retain  
          price-parity across diet and full-calorie soda.  If the  
          -------------------------
          <6> American Beverage Association. SB 622 Economic Impact  
          Analysis. 15 April 2013. 
          <7> French, S.A., Wall, M., & Mitchell, N.R. Household  
          income differences in food sources and food items  
          purchased. (2010) International Journal of Behavioral  
          Nutrition and Physical Activity (2010) [Internet].  
          Available from:  http://www.ijbnpa.org/content/7/1/77  





          SB 622 -- 4/17/13  -- PageK

          excise tax is not directly placed onto the bottled  
          sweetened beverage, will the consumer receive a price  
          signal that would change his or her consumption decision?   
          Proponents argue that the $2.6 billion in tax revenues will  
          increase education, thereby helping reduce consumption, and  
          mitigate the price-parity argument.

          4.   City measures  .  The cities of Richmond (Contra Costa  
          County) and El Monte (Los Angeles County) put a  
          penny-per-ounce tax measures on the November 6, 2012  
          ballot.  Richmond's Measure N failed (67% against), and El  
          Monte's Measure H failed (76% against).  However, the  
          cities' accompanying measures (Richmond's Measure O, and El  
          Monte's Measure C), which would have allocated revenues to  
          pay for obesity and diabetes prevention programming, passed  
          at 65% support and 61% support, respectively.  These  
          results are consistent with a February 2013 California  
          Field Poll, which found overwhelming support for a SSB tax  
          when funds were directly used to improve school nutrition  
          and physical activity programs (68% in favor vs. 29%  
          opposed).  Furthermore, support is strong among Latinos  
          (79%), Asian Americans (73%), and African Americans  
          (70%).<8>  If current obesity trends continue, it is  
          predicted that one in three children -- nearly half of  
          Latino and African American children -- born in the year  
          2000 will develop type II diabetes.  Because low-income  
          persons and minority communities bear a large burden of  
          chronic diseases related to obesity, a SSB tax is  
          beneficial to reduce the risk of chronic disease and would  
          likely result in saving to the state from  preventable  
          chronic conditions.2

          5.  Universal consumption  .  Adam Smith wrote in The Wealth  
          of Nations, "Sugar, rum, and tobacco are commodities which  
          are nowhere necessaries of life, [but] which are?objects of  
          almost universal consumption, and which are therefore  
          extremely proper subjects of taxation."  The BOE also  
          administers and collects the alcoholic beverage tax.   
          Opponents argue that this bill would tax SSBs at a higher  
          rate than on alcoholic beverages.  Currently, California  
          alcoholic beverages tax rates are:

          -------------------------
          <8> DiCamillo, M. & Field, M. Two in three voters support  
          taxing sugary-sweetened beverages if proceeds are tied to  
          improving school nutrition and physical activity programs.   
          The Field Poll (2013) 2436. Available at:  
           http://field.com/fieldpollonline/subscribers/Rls2436.pdf  





          SB 622 -- 4/17/13  -- PageL

           ------------------------------------------------------------- 
          |          Categories          |     Rate per wine gallon     |
          |                              |         (2008-2013)          |
          |------------------------------+------------------------------|
          |Distilled spirits (100 proof  |            $3.30             |
          |or less)                      |                              |
          |------------------------------+------------------------------|
          |Distilled spirits (over 100   |            $6.60             |
          |proof)                        |                              |
          |------------------------------+------------------------------|
          |Beer                          |            $0.20             |
          |------------------------------+------------------------------|
          |Wine                          |            $0.20             |
          |------------------------------+------------------------------|
          |Sparkling hard cider          |            $0.20             |
          |------------------------------+------------------------------|
          |Champagne and sparkling wine  |$0.30                         |
           ------------------------------------------------------------- 

          Opponents cite that the proposed SSB tax would result in a  
          rate of $1.28 gallon, nearly 6.4 times higher than the  
          excise tax on wine or beer.  However, this is consistent  
          with nation's lower alcohol excise tax rates.  As proposed,  
          all 50 states would have a lower excise tax on beer than  
          the proposed soda rate, and 39 states would have a lower  
          excise tax on wine than the proposed SSB rate.<9> 

          6.   Additional policies  .  Reducing the obesity epidemic  
          must include a multi-prong policy approach that promotes  
          education, healthy eating, reduced cost for healthier foods  
          and drinks, and access to physical activity.  California  
          limits the provision or sale of sweetened beverages in  
          childcare facilities and schools.  Some cities, like  
          Baldwin Park, San Jose, and Visalia, and counties, like  
          Santa Clara and San Diego, have specific healthy vending  
          policies in place.  Another approach to reduce access to  
          sugar sweetened beverages may be to analyze land use  
          patterns for zoning density or the number of sweetened  
          beverage retailers near schools or playgrounds.  Lastly,  
          the Federal Food, Drug, and Cosmetic Act and the Fair  
          Packaging Labeling Act govern food product labeling  
          practices.  While California has adopted state and local  
          policies to address SSB and healthy food options, there is  
          no stable and consistent funding for nutrition education  
          and physical activity programs to prevent childhood  
          -------------------------
          <9> Drenkard, S. Soda Tax Proposals Bubbling Up in  
          California. TaxFoundation, (332) 25 October 2012. 





          SB 622 -- 4/17/13  -- PageM

          obesity.  By taxing SSB and creating a Children's Health  
          Promotion Fund, SB 622 provides a stable financial  
          mechanism, which in conjunction with existing state and  
          local policies, combats the childhood obesity epidemic.

          7.   Double-referred  .  The Senate Rules Committee ordered a  
          double-referral of SB 662 to the Senate Governance and  
          Finance Committee, which will consider the bills' excise  
          tax provisions, and to the Senate Health Committee, which  
          has jurisdiction over public health measures.  

          8.   Similar efforts  .  SB 662 is not the only bill this  
          legislative session that seeks to address increasing access  
          to healthy foods and reducing obesity. 
                 AB 38 (Pérez) creates the Office of Farm to Fork,  
               and a related fund, in the state's Department of Food  
               and Agriculture, to promote food access.
                 AB 459 (Mitchell) would require that foods in  
               vending machines meet accepted nutritional guidelines  
               by specified benchmarks in 2015, 2016, and 2017.  The  
               bill is currently in the Assembly Business,  
               Professions, and Consumer Protection Committee.

          9.   Related legislation .  SB 622 is not the first bill  
          seeking to tax sweetened beverages.
                 AB 669 (Monning, 2011) was this bill's predecessor.  
                It was held in the Assembly Revenue and Taxation  
               Committee.
                 AB 2100 (Coto, 2010) would have imposed a one cent  
               tax per teaspoon of added sweetener in a bottled  
               sweetened beverage or in a sweetened concentrate.  
               Assembly Bill 2100 was held in the Assembly Revenue  
               and Taxation Committee. 
                 SB 1210 (Florez, 2010), a similar measure, was  
               placed on the former Senate Revenue and Taxation  
               Committee's suspense file. 
                 SB 1520 (Ortiz, 2002), which would have imposed an  
               excise tax 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 soda tax provisions were removed  
               from the April 29, 2002, version of the bill. 
                 AB 105 (Moore, 1983) would have imposed an excise  
               tax on the distribution of nonalcoholic carbonated  
               beverages, except carbonated water and carbonated  






          SB 622 -- 4/17/13  -- PageN

               fruit juice, at the rate of seven cents ($0.07) per  
               gallon.  The provisions of that bill also included an  
               excise tax on the distribution of nonalcoholic  
               carbonated beverage syrup at the rate of fifty cents  
               ($0.50) per gallon of liquid syrup.  That bill also  
               died in the Assembly Revenue and Taxation Committee.


                         Support and Opposition  (4/18/13)

           Support  :  California Center for Public Health Advocacy;  
          American Federation of State, County, and Municipal  
          Employees (AFSCME), AFL-CIO; American Heart Association;  
          California Academy of Physician Assistants; California  
          Association of Food Banks; California Association for  
          Health, Physical Education, Recreation and Dance (CAHPERD);  
          California Association of Nutrition and Activity Program  
          (CAN-Act); California Black Health Network; California  
          Chiropractic Association (CCA); California Conference of  
          Local Health Department Nutritionists; California Food  
          Policy Advocates; California Optometric Association;  
          California Pan-Ethnic Health Network (CPEHN); California  
          Public Health Association - North (CPHA-N); California  
          Primary Care Association (CPCA); California Rural Legal  
          Assistance Foundation; California School Health Centers  
          Association; California WIC Association; Center for  
          Collaborative Solution (CCS); Center for Ecoliteracy;  
          Center for Science in the Public Interest (CSPI); Edible  
          Schoolyard Project (ESYP); Mayor Andre Quintero, City of El  
          Monte; Community Hospital of the Monterey Peninsula; County  
          of Santa Clara; County of Sonoma Department of Health  
          Services; First 5 Yolo; Health Access California; Health  
          Education Council; Health Officers Association of  
          California (HOAC); Health Promotion Policy; Latino  
          Coalition for a Healthy California; Latino Health Access;  
          Los Olivos School District; Lucile Packard Children's  
          Hospital; Mission Hospital; Prevention Institute; Public  
          Health Institute; San Francisco Unified School District;  
          The School Gardens Program; Southern California Public  
          Health Association; Strategic Alliance for health food and  
          Activity Environments; 2 individuals.

           Opposition  :  Asian Business Association; Brea Chamber of  
          Commerce; California Automatic Vendors Council (CAVC);  
          California Chamber of Commerce; California Nevada Soft  
          Drink Association; California Restaurant Association;  
          California Teamsters Public Affairs Council; Empire Bowling  






          SB 622 -- 4/17/13  -- PageO

          Center; Howard Jarvis Taxpayers Association; Korean  
          American Chamber of Commerce of Los Angeles; PepsiCo;  
          Producers Dairy.