News and Insights

More Cities Get Sour on Sweets

Tax Development Nov 15, 2016

Californian Cities and Boulder, Colorado Approve Sugar-Sweetened Beverage Taxes

On Tuesday, November 8th, voters in Californian cities (Albany, Oakland, and San Francisco), as well as Boulder, Colorado approved “soda tax” ballot initiatives.

Boulder Ballot 2H, Sugar-Sweetened Beverage Product Distribution Tax, will impose an excise tax of 2 cents ($0.02) per ounce on the first distributor of such drinks. “Sugar-sweetened beverage” is any non-alcoholic beverage that contains at least 5 grams of caloric sweeter per 12 fluid ounces. Such beverages include soda, pop, cola, soft drinks, sports drinks, energy drinks, sweetened ice tea, and sweetened coffees. Boulder will exempt sweeteners sold separately to consumers at a grocery store, milk products, baby formula, alcohol, and medical drinks. The tax will be effective July 1, 2017.

California Initiatives

Albany Measure O1 passed, implementing the Sugar-Sweetened Beverage Product Distribution Tax, which will impose a tax of one cent ($0.01) per fluid ounce on the privilege of distributing sugar-sweetened beverage products in Albany. “Sugar-sweetened beverage” is any beverage intended for human consumption to which one or more added caloric sweeteners has been added containing at least 2 calories per fluid ounce, such as soda, pop, cola, soft drinks, sports drinks, energy drinks, and sweetened ice teas. Exempt beverages include milk products, medical beverages, alcohol, baby formula, and meal replacement liquids.

Oakland Measure HH will impose a 1 cent ($0.01) per ounce general tax on the distribution of sugar-sweetened beverages, including products such as sodas, sports drinks, sweetened teas, and energy drinks. “Sugar-sweetened beverages” are defined as any beverage to which one or more caloric sweeteners have been added and that contain 25 or more calories per 12 fluid ounces of beverage. However, milk products, 100% juice drinks, baby formula, diet drinks, or medical drinks will not be subject to the tax. Effective July 1, 2017, distributors will be responsible for the tax. However, small businesses with less than $100,000 in yearly gross sales are exempt from the tax. 

San Francisco Measure V, dubbed the Soda and Sugary Beverage Grocery Tax, will impose a tax on all sugar-sweetened beverages, such as soft drinks, sports drinks, and iced teas, as well as fountain beverages, at a rate of 1 cent ($0.01) per ounce. “Sugar-sweetened beverages” are beverages that contain added sugar and 25 or more calories per 12 ounces. Effective January 1, 2018, distributors will be responsible for the tax.

Californian cities Albany, Oakland, and San Francisco, as well as Boulder Colorado are not the only cities to recently adopt a tax on such sugary beverages. They will now join Berkley, California (2014), as well as Philadelphia, Pennsylvania, which passed its sweetened beverage tax with its FY2016-2017 Budget and becomes effective January 1, 2017.