Oakland Municipal Code Ch. 4.52 Sugar-Sweetened Beverage Distribution Tax

This chapter shall be known as the "Sugar-Sweetened Beverage Distribution Tax Ordinance."

(Res. No. 86161, § 3, 5-3-2016)

Except where the context otherwise requires, the following definitions govern the construction of this Chapter:

A. "Alcoholic Beverage" means any beverage that is subject to taxation as an Alcoholic beverage under California Revenue and Taxation Code, Sections 32001 et seq., as may be amended from time to time.

B. "Beverage for Medical Use" means a beverage suitable for human consumption and manufactured for use as an oral nutritional therapy for persons who cannot absorb or metabolize dietary nutrients from food or beverages, or for use as an oral rehydration electrolyte solution formulated to prevent or treat dehydration due to illness. "Beverage for Medical Use" also means a "medical food" as defined in Section 109971 of the California Health and Safety Code. "Beverage for Medical Use" shall not include beverages commonly referred to as "sports drinks" or any other common names that are derivations thereof.

C. "Business Entity" means any Person except for a natural person.

D. "Caloric Sweetener" means any substance or combination of substances meeting all of the following criteria:

1. Is suitable for human consumption,

2. Adds calories to the diet when consumed,

3. Is perceived as sweet when consumed, and

4. Is used for making, mixing, or compounding Sugar-Sweetened beverages by combining the substance or substances with one or more ingredients including, but not limited to, water, ice, powder, coffee, tea, fruit juice, vegetable juice, or carbonation or other gas.

"Caloric Sweetener" includes, but is not limited to, sucrose, fructose, glucose, other sugars, and high fructose corn syrup.

E. "City" means the City of Oakland, California.

F. "Community Advisory Board" means the Sugar-Sweetened Beverage Distribution Tax Advisory Board described in Section 4.52.070.

G. "Consumer" or "Consumers" means a natural person or persons who purchase a Sugar-Sweetened Beverage Product(s) in the City for a purpose other than resale in the ordinary course of business.

H. "Distribution", "Distribute" or "Distributing" means the transfer of title or possession: (a) from one Business Entity to another for consideration; or (b) within a single Business Entity, such as by a wholesale or warehousing unit to a retail outlet or between two or more employees or contractors of said Business Entity. "Distribution" or "Distribute" shall not mean the retail sale to a consumer.

I. "Distributor" means any Person who Distributes Sugar-Sweetened Beverage Product(s) within the City.

J. "General Tax" means any tax imposed for general governmental purposes.

K. "Milk Product" means: (a) any beverage whose principal ingredient by weight is natural milk secreted by an animal; and (b) any plant-based substance or combination of substances in which (i) water and (ii) grains, nuts, legumes, or seeds, constitute the two greatest ingredients by volume. For purposes of this definition, "natural milk" includes natural milk concentrate and dehydrated natural milk, whether or not reconstituted. For purposes of this definition, "Milk Product" includes, but is not limited to, soy milk, almond milk, rice milk, coconut milk, hemp milk, oat milk, hazelnut milk, flax milk.

L. "Natural Common Sweetener" means: granulated white sugar, brown sugar, honey, molasses, xylem sap of maple trees, or agave nectar.

M. "Person" means any natural person, partnership, cooperative, association, Limited Liability Company, corporation, personal representative, receiver, trustee, assignee, or any other legal entity.

N. "Powder" means any solid mixture containing one or more Caloric Sweeteners as an ingredient intended to be used in making, mixing or compounding a Sugar-Sweetened Beverage by combining the Powder with one or more other ingredients.

O. "Retailer" means any Person serves Sugar-Sweetened Beverage Product(s) to Consumer(s).

P. "Small Business" means any Business Entity with less than $100,000 in annual gross receipts in the most recent calendar year that distributes, sells, serves or provides Sugar- Sweetened Beverage Product(s) directly to final Consumers.

Q. "Sugar-Sweetened Beverage" means any beverage intended for human consumption to which one or more caloric sweeteners has been added and that contains 25 or more calories per 12 fluid ounces of beverage.

1. "Sugar-Sweetened Beverage" includes, but is not limited to, drinks and beverages commonly referred to as "soda," "pop," "cola," "soft drinks," "sports drinks," "energy drinks," "slushies," "sweetened ice teas," or any other common names that are derivations thereof.

2. "Sugar-Sweetened Beverage" shall not include: (a) any beverage sold for consumption by infants, which is commonly referred to as "infant formula" or "baby formula," or oral rehydration fluids for children; (b) any Beverage for Medical Use; (c) any beverage designed as supplemental, meal replacement, or sole-source nutrition that includes proteins, carbohydrates, and multiple vitamins and minerals; (d) Milk Products; (e) 100 percent natural fruit or vegetable juice with no added caloric sweetener; or (f) alcoholic beverage.

R. "Sugar-Sweetened Beverage Distribution Tax" or "Tax" is the general excise tax imposed under Section 4.52.030.

S. "Sugar-Sweetened Beverage Product(s)" means a Sugar-Sweetened Beverage or caloric sweetener.

T. "Syrup" means any liquid or frozen mixture, containing one or more Caloric Sweeteners as an ingredient, intended to be used in making, mixing, or compounding a Sugar-Sweetened Beverage by combining the Syrup with one or more other ingredients.

U. "Tax Administrator" means the Director of Finance for the City of Oakland or the designee of the Director of Finance.

(Res. No. 86161, § 3, 5-3-2016)

A. In addition to any other taxes imposed by the City, the City hereby levies a General Tax of one cent ($0.01) per fluid ounce on the privilege of Distributing Sugar-Sweetened Beverage Products in the City.

B. For the purposes of this Chapter , the volume, in ounces, of a Sugar-Sweetened Beverage product shall be calculated as follows:

1. For a Sugar-Sweetened Beverage, the volume, in fluid ounces, of Sugar-Sweetened Beverages distributed to any Person in the course of business in the City.

2. For added Caloric Sweeteners, the largest volume, in fluid ounces, of Sugar-Sweetened Beverages that could be produced from the added Caloric Sweeteners. In accordance with rules and regulations promulgated by the City pursuant to Section 4.52.040, the largest volume, in fluid ounces, that would typically be produced from the added Caloric Sweeteners shall be determined based on the manufacturer's instructions or, if the Distributor uses that added Caloric Sweeteners to produce a Sugar-Sweetened Beverage, the regular practice of the Distributor.

3. The Tax shall be paid upon the first nonexempt Distribution of a Sugar-Sweetened Beverage product in the City. To the extent that there is a chain of Distribution within Oakland involving more than one Distributor, the tax shall be levied on the first Distributor subject to the jurisdiction of the City. To the extent the Tax is not paid as set forth above for any reason, it shall be payable on subsequent Distributions and by subsequent Distributors; provided, that the Distribution of Sugar-Sweetened Beverage products may not be taxed more than once in the chain of commerce.

C. The Tax shall not apply to:

1. To any Distributor that is not subject to taxation by the City under the laws of the United States or the State of California.

2. The Distribution of any Sugar-Sweetened Beverage Product by a Small Business as defined in this Chapter.

3. To any Distribution of Natural or Common sweeteners.

(Res. No. 86161, § 3, 5-3-2016)

A. It shall be the duty of the Tax Administrator to collect and receive all taxes imposed by this Chapter , and to keep an accurate record thereof.

B. The Tax Administrator is hereby charged with the enforcement of this Chapter , except as otherwise provided herein, and may prescribe, adopt, and enforce rules and regulations relating to the administration and enforcement of this Chapter. Such rules and regulations shall include, but are not limited to:

1. The reexamination and correction of returns and payments, and for reporting.

2. Prescribing the methods, frequency, and schedules for the calculation, collection and payment of the tax.

3. The manner and form in which a Distributor must register with the City, and shall report and remit the tax.

4. How a Distributor or a Retailer who receives, in the City, Sugar-Sweetened Beverage Product(s) from a Distributor must report to the City the name of that Distributor and the volume of Sugar-Sweetened Beverage Product(s).

5. The documentation to be created or maintained by a Distributor or a Retailer.

6. The administrative process and procedures for any Person against whom a determination is made by the Tax Administrator under this Chapter or any Person directly interested in such determination, shall follow to dispute or otherwise challenge a determination, and the form, manner and time within which a determination may be disputed or challenged.

C. Adoption and implementation by the Tax Administrator of rules and regulations authorized by this Section shall not constitute new or increased tax requiring approval by the voters of the City.

D. The Tax Administrator shall annually verify that the taxes owed under this Chapter have been properly applied, exempted, collected and remitted.

(Res. No. 86161, § 3, 5-3-2016)

A. Every Person engaged in or about to engage in business as a Distributor in the City shall immediately register with the City in the manner and form determined by the Tax Administrator. Persons engaged in such business must be registered no later than thirty (30) days after the date the tax imposed by this Chapter becomes effective on July 1, 2017, but such privilege of such registration after the date of imposition of such tax shall not relieve any person from the obligation or payment or collection of tax on and after the date of imposition thereof, regardless of registration.

B. Any person who fails to pay the tax to the City or any amount of tax required to be collected and paid to the City within the time required by the rules and regulations established by the Tax Administrator shall pay a penalty of twenty-five (25) percent of the tax or amount of the tax, in addition to the tax or amount of delinquent tax, plus interest, computed on the amount of delinquent tax, inclusive of penalties, at the rate of one percent per month, or fraction thereof, from the date on which the tax or the amount of tax required to be collected became due and payable to the City and until the date of payment.

C. The amount of any tax, penalty, and interest imposed by this Chapter shall be deemed a debt to the City. Any Distributor owing money under the provisions of this Chapter shall be liable in an action brought in the name of the City for the recovery of such amount.

D. In order to aid in the collection of taxes due to the City under this Chapter , any Distributor or Retailer that distributes, receives or sells Sugar-Sweetened Beverage Product(s) shall provide information to the City regarding the Distribution of these products in accordance with rules and regulations adopted by the Tax Administrator.

E. The City Council is authorized to have the taxes imposed by this Chapter collected by the County of Alameda or the California Board of Equalization in conjunction with the collection of other taxes for the City. If the City Council exercises this authorization, the duties and responsibilities of the Tax Administrator shall be given, as appropriate, to the County of Alameda or the California Board of Equalization, which may delegate such duties and responsibilities as necessary and as authorized by law.

(Res. No. 86161, § 3, 5-3-2016)

A. Any tax under this Chapter that has been paid more than once or has been erroneously or illegally collected or received by the City shall be refunded as determined by the Tax Administrator.

B. Any tax under this Chapter that has been returned to the Distributor within six (6) months of the initial Distribution and for which the entire purchase price has been refunded in cash or credit shall be refunded as determined by the Tax Administrator.

C. Claims must be filed with the Tax Administrator and determined in accordance with the rules and regulations to be established by the Tax Administrator within one year from the date of payment of the tax to the City. No refund shall be paid under this Section unless claimant establishes entitlement thereto by written documentation.

(Res. No. 86161, § 3, 5-3-2016)

The Tax Administrator or any authorized employee is authorized to examine the books, papers, tax returns and records of any Person subject to this Chapter for the purpose of verifying the accuracy of any declaration made, or if no declaration was made, to ascertain the tax due.

Every Person subject to the provisions of this Chapter is directed and required to furnish to the Tax Administrator or duly authorized agent or employee, the means, facilities and opportunity for making such examination and investigations. The Tax Administrator is authorized to examine a person under oath, for the purpose of verifying the accuracy of any declaration made, or if no declaration was made, to ascertain the business tax or registration fees due under this Chapter. In order to ascertain the business tax or registration fees due under this Chapter, the Tax Administrator may compel, by administrative subpoena, the production of relevant books, papers and records and the attendance of all persons as parties or witnesses.

Except for disclosures to agents, attorneys, or employees of the City necessary to the purpose of administering or enforcing the tax, or in compliance with a court order, or in connection with an appeal, hearing or court action, City employees shall maintain the confidentiality of all business and personal information and documents furnished to or obtained by the Tax Administrator in connection with the collection or administrative proceedings relating to the determination and assessment of taxes.

The refusal to submit to such examination or production by any employer or person subject to the provisions of this Chapter shall be deemed a violation of this Chapter, and administrative subpoenas shall be enforced pursuant to applicable state law.

(Res. No. 86161, § 3, 5-3-2016)

There is hereby established a Community Advisory Board.

A. The Community Advisory Board shall advise and make recommendations on how and to what extent the City Council should establish and/or fund programs to prevent or reduce the health consequences of the consumption of sugar-sweetened beverages in Oakland communities, including but not limited to programs and projects to improve community nutrition, reduce childhood obesity and tooth decay, increase physical activity and prevent diabetes in children and families, especially those most affected by health disparities.

B. The Community Advisory Board shall consist of nine (9) members who are all residents of the City. City Councilmembers shall make recommendations for members to the Mayor. Members of the Advisory Board shall be appointed by the Mayor and confirmed by the City Council in accordance with City Charter section 601.

1. At least three (3) members will be residents who live in areas, as defined by the most current census tracts, which are disproportionately impacted by diseases related to the consumption of sugar, as measured by the most recent data available to the Alameda County Department of Public Health.

2. At least two (2) members will be one medical and one dental professional who have public health experience or who engage in whole or in part in the prevention, diagnosis, treatment, or research of, or education about, chronic diseases linked to the consumption of sugar.

3. At least two (2) parents of students currently enrolled in an Oakland Unified School District (OUSD). The parent representatives shall have a student enrolled in an OUSD school at the commencement of the initial term and any subsequent term.

4. At least two (2) members will have experience in addressing public health issues, related to diabetes, obesity and sugary drink consumption, community-based youth food and nutrition programs, school-based food and nutrition programs, oral health or early childhood nutrition.

C. Members shall serve three (3) year terms. No member shall serve more than two (2) consecutive three (3) year terms. The initial two (3) year term for each of the initial members shall commence as of the date that six (6) members have been appointed, which is when the Advisory Board may begin its work. A quorum of the Advisory Board shall be five (5) members. Absence from three (3) consecutive regular meetings, or four (4) regular meetings during a single fiscal year, shall constitute resignation from the Advisory Board.

D. Members of the Community Advisory Board shall serve without pay.

E. The City Administrator shall provide clerical assistance and administrative support and technical assistance to the Community Advisory Board. All City departments, boards, and commissions shall reasonably assist and cooperate with the Community Advisory Board.

F. The Community Advisory Board shall meet at least four (4) times per fiscal year.

G. Unless otherwise reauthorized by the City Council, this Section shall expire by operation of law, and the Community Advisory Board shall terminate, as of December 31, 2028. After that date, the City Attorney shall cause this Section to be removed from the Administrative Code.

H. The Community Advisory Board shall publish an annual report that includes the following: 1) Recommendations on how to allocate the City's general funds to reduce the consumption of sugar sweetened beverages in Oakland and to address the results of such consumption; 2) How and to what extent the City Council and Mayor have implemented the recommendations presented by the Board; 3) Information, if available, concerning the impact of this Chapter on the public health of the residents of the City; and 4) Any additional information that the Panel deems appropriate.

I. Within 15 days of receipt of the publication of the Advisory Board's annual report, the City Administrator shall cause the report to be published on the City's Internet website and to be transmitted to the City Council.

(Res. No. 86161, § 3, 5-3-2016)

Collection of the tax shall begin on July 1, 2017.

(Res. No. 86161, § 3, 5-3-2016)

All tax revenue collected and remitted to the City pursuant to this Chapter shall be deposited in the City of Oakland unrestricted general fund to be used for any lawful government purpose.

(Res. No. 86161, § 3, 5-3-2016)