Sugar Sweetened Beverage Tax

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. The drinks that are subject to the tax 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 pre-sweetened 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, alcoholic mixers and 100 percent natural fruit and/or vegetable juice are exempt.

The distributor of sugar-sweetened beverage products is responsible to pay the tax imposed on each non-exempt distribution of a sugar-sweetened beverage product in the city. If there is a chain of distribution within the city involving more than one distributor, the tax is levied on the first distributor subject to the jurisdiction of the city. If the tax is not paid by the first distributor for any reason, it is levied on subsequent distributors, provided that the distribution of sugar-sweetened beverage products may not be taxed more than once in the chain of commerce within the city. The city’s interpretation of the definition of “distribution" includes retailers obtaining and bringing the beverages into the city themselves (“self-distributors”). The Boulder City Council is currently considering amendments to the ordinance that will further define and clarify “distribution” to include various self-distribution scenarios.

Distributors are free to 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 tax rate is two cents ($0.02) per fluid ounce for ready-to-consume, liquid sugar-sweetened beverage products. However, the tax on added “caloric sweeteners” in the form of syrups and powders is calculated on the maximum volume, in fluid ounces, of beverage that the syrup or powder can produce based on the manufacturer’s instructions. While the ordinance requires the tax to be paid on the first non-exempt distribution in the city, if it is not paid at that time, it is payable on the next (or any subsequent) distribution, provided that no taxable product may be taxed more than once.

For Sugar-Sweetened Beverages

Number of ounces of Sugar-Sweetened Beverage X Tax Rate = Sugar-Sweetened Beverage Tax

For example:

• a 12-ounce can of Sugar-Sweetened Soda X .02 = 24 cents ($0.24) Sugar-Sweetened Tax
• an 8-ounce bottle of Sugar-Sweetened Beverage X .02 = 16 cents ($0.16) Sugar-Sweetened Tax

For Syrups or Powders:

The manufacturer’s suggested serving size for the volume of fluid ounces of sugar-sweetened beverages produced from syrup or powder upon the initial distribution of syrup or powder; or

If the labeling or packaging does not specify the recommended number of servings per container, the tax shall be calculated using the largest volume of fluid ounces of sugar-sweetened beverages that could be produced from syrup or powder upon the initial distribution of syrup or powder.

​ For Example - a 750ml bottle of flavored syrup has 20 grams of sugar per one ounce serving and there are 25 servings in the container.

• 25 servings X 12 ounces (one serving size) = 300 ounces of SSB
• 300 ounces X .02 (SSB tax rate) = $6.00 SSB Tax

According to the ballot measure, funds generated from the tax will cover the administrative cost of the tax. Additional revenue must be used to improve health equity in Boulder through the support of health promotion, general wellness programs and chronic disease prevention. The city established the Health Equity Fund to allocate SSB Tax revenue in alignment with this legislative intent. The city defines health equity as “the absence of systematic health disparities based on socio-economic factors, and the ability of all residents to reach their full health potential, regardless of their life circumstances.”

Most Health Equity Fund funding allocations are made to Boulder non-profit organizations, agencies or institutions through a competitive annual fund round. Programs must benefit community members experiencing health disparities. Funding recommendations are made by the City of Boulder’s Health Equity Advisory Committee (HEAC), a nine-member committee comprised of community members, appointed by the city manager, with diverse expertise in health disparity and health equity issues. HEAC members review funding applications and make recommendations to staff and the city manager based on the HEF funding criteria.

For more information, please visit the Health Equity Fund webpage.

If you supply sweetened beverages wholesale to retailers in the City of Boulder, then you are a distributor. As a distributor, you are liable for payment of the Sugar Sweetened Beverage Product Distribution Tax (SSB Tax) on the distribution of sweetened beverages sold to retailers located in Boulder.

"Distribution" or "distribute" means the transfer of title or possession:

• From one business entity to another for consideration; or
• 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; or

Further definition of these terms is currently under consideration by City Council (ordinance 8184 scheduled for June 20, 2017). This would include the following: For products for which the SSB Tax tax imposed has not been paid by a prior distributer, "distribution" or "distribute" also means the placement of a product with a retailer of sugar-sweetened beverage product.

The definition does not mean the retail sale to a consumer.

Typical taxable distributions would include, but is not limited to:

• Delivery of syrup to fast food or other restaurants;
• Delivery of syrup to stores that sell fountain drinks; and
• Delivery of Bottled Sugar-Sweetened Beverage with added caloric sweeteners to retail outlets and restaurants.
• Purchase of Bottled Sugar-Sweetened Beverage or powders/syrups with added caloric sweeteners from unregistered distributors (self-distribution).

Below is a suggested 2-step method for determining whether the tax applies to the distribution of a Sugar-Sweetened Beverage. It does not constitute legal advice and so legal counsel should be consulted on the applicability of the tax to the distribution of a particular beverage.

Step 1: Does the non-alcoholic beverage have at least 5 grams of caloric sweetener per 12 fluid ounces?

• If no, then the tax does not apply. (Example: This includes most diet drinks that don’t have calories.)
• If yes, proceed to Step 2.

Step 2: Sugar-Sweetened Beverage does NOT include any of the following;

• Any beverage in which milk is the primary ingredient, i.e. the ingredient constituting a greater volume of the product than any other;
• Any beverage for medical use;
• Any liquid sold for use for weight reduction as a meal replacement;
• Any product commonly referred to as “infant formula” or “baby formula;”
• Any alcoholic beverage;
• Any beverage consisting of one hundred (100) percent natural fruit or vegetable juice;
• Sweetened medication such as cough syrup, liquid pain relievers, fever reducers, and similar products.
• Any beverage that is distributed for use at the University of Colorado for consumption as part of a meal plan that includes both food and drinks from July 1, 2017 to June 30, 2018;
• Any product commonly used exclusively to mix with alcohol that may exceed 5 grams or more per serving of caloric sweetener per 12 ounces of fluid that is not a sugar sweetened beverage, including without limitation margarita mix, bloody mary mix, daiquiri mix or similar products. If no, then the tax does not apply. (Example: 100 percent fruit or vegetable juice that, by definition, don’t have added sugar because it is 100 percent fruit or vegetable.) If yes, then the tax is likely to apply.

If you sell sweetened beverages to customers at the retail level, then you’re a retailer. Businesses may include but are not limited to the following:

• Corner Stores/Delis
• Grocery Stores
• Restaurants
• Schools
• Food Trucks
• Vending Machine Operators

Purchase from a Registered Distributor

See the complete list of Registered Distributors on the website

Notify your distributor that you are located in the City of Boulder

Make sure your distributor knows you are located in the City of Boulder and that they will need to pay the Sugar-Sweetened Beverage Tax on products they supply to you.

Keep track of your invoices

Once a registered distributor is notified that you are located in the City of Boulder, your invoice should identify that your distributor has paid the excise tax. You may be asked to provide these invoices to the city's Tax and Licensing Division in the future to prove you purchased from a registered distributor.

The City’s interpretation of the definition of “distribution" includes retailers obtaining and bringing the beverages into the City themselves (“self-distributors”). If you operate a business that is a "self-distributor", you are obligated to file and pay the excise tax on sugar-sweetened beverage products; please use the Sugar-Sweetened Beverage Distribution Excise Tax Return Form Image removed. to comply.

Distributors are free to pass the added cost of the SSB Tax on to retailers. Likewise, retailers may or may not pass the cost along to their consumers.

Let your customers know about the tax

The City of Boulder has developed several tools you can download to share information with your customers about the Sugar-Sweetened Beverage Product Distribution Tax. These point-of-sale (POS) handouts and posters are available for you to download and use within your business to explain the tax and where revenue will go.

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.

The sugar sweetened beverage tax is not a consumer sales tax

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.

Consumers might see price increases in their sugar-sweetened drinks

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.

Boulder was one of the first US cities to pass this tax

Boulder was 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.