2013 -- H 5228

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LC00824

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

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A N A C T

RELATING TO TAXATION -- SUGAR-SWEETENED BEVERAGE TAX

     Introduced By: Representatives Ajello, Handy, Tanzi, Cimini, and Valencia

     Date Introduced: January 31, 2013

     Referred To: House Finance

It is enacted by the General Assembly as follows:

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     SECTION 1. Title 44 of the General Laws entitled "TAXATION" is hereby amended by

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adding thereto the following chapter:

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     CHAPTER 18.2

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SUGAR-SWEETENED BEVERAGE TAX

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     44-18.2-1. Sugar-sweetened beverage tax. -- (a) There is hereby levied and imposed, in

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addition to all other taxes and fees now imposed by law, a sugar-sweetened beverage tax upon

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every sugar-sweetened beverage, syrup, powder or other base product sold within the state of

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Rhode Island by a distributor, manufacturer, or wholesaler to a retailer or other purchaser,

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calculated as follows:

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     (1) The tax on sugar-sweetened beverages shall be one dollar and twenty-eight cents

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($1.28) per gallon of sugar-sweetened beverage.

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     (2) The tax on syrup, powder or other base product sold or offered for sale, either as

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syrup, powder or other base product or as a sugar-sweetened beverage derived from that syrup,

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powder or other base product, shall be equal to one dollar and twenty-eight cents ($1.28) per

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gallon of sugar-sweetened beverage produced from the syrup, powder or other base product. For

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the purposes of calculating the tax, the volume of sugar-sweetened beverage produced from the

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syrup, powder or other base product shall be the largest potential volume resulting from use of the

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syrup, powder or other base product according to the manufacturer's instructions.

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     (b) The tax shall be paid to the tax administrator by the distributor, manufacturer, or

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wholesaler of the sugar-sweetened beverage, syrup, powder or other base product. All taxes paid

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pursuant to this section are conclusively presumed to be a direct tax on the retail consumer, pre-

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collected for the purpose of convenience and facility only.

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     (c) All sums received by the division of taxation under this section, after costs to

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implement this section have been deducted, shall be allocated to the prevention and wellness trust

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fund established under chapter 23-88 of the Rhode Island general laws.

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     (d) As used in this section, the following terms shall have the following meanings:

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     (1) "Distributor, manufacturer or wholesaler" means any person who receives, stores,

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manufacturers, bottles or sells sugar-sweetened beverages, syrup, powder or other base product to

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retail dealers, or to other distributors, manufacturers or wholesaler.

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     (2) "Milk" means natural liquid milk regardless or animal source or butterfat content;

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natural milk concentrate, whether or not reconstituted, regardless of animal source or butterfat

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content; or dehydrated natural milk, whether or not reconstituted.

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     (3) "Natural fruit juice" means the original liquid resulting from the pressing of fruit, the

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liquid resulting from the reconstitution of fruit juice concentrate or the liquid resulting from the

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restoration of water to dehydrated fruit juice.

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     (4) "Natural vegetable juice" means the original liquid resulting from the pressing of

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vegetables, the liquid resulting from the reconstitution of vegetable juice concentrate or the liquid

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resulting from the restoration of water to dehydrated vegetable juice.

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     (5) "Nonalcoholic beverage" means any beverage that is not included in the definition of

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"beverage" in subdivision 3-1-1(1).

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     (6) "Powder, syrup or other base product" means any solid or liquid mixture of base

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ingredients used in making, mixing or compounding sugar-sweetened beverages, by mixing the

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powder, syrup or other base product with water, ice, a powder, syrup, simple syrup, fruits,

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vegetables, fruit juice, vegetable juice, carbonation or other gas, or any other product suitable to

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make a sugar-sweetened beverage.

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     (7) "Retailer" means any person, except a distributor, manufacturer or wholesaler, who

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sells or otherwise dispenses sugar-sweetened beverages in the state of Rhode Island to the

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ultimate consumer.

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     (8) "Sale" means the transfer of title or possession for a valuable consideration of tangible

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personal property regardless of the manner by which the transfer is accomplished.

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     (9) "Sugar-sweetened beverage" means any nonalcoholic beverage, whether naturally or

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artificially flavored, whether carbonated or noncarbonated, sold for human consumption,

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containing sugar, corn syrup or any other high-calorie sweetener, including, but not limited to,

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cola and other flavored drinks, and all other drinks and beverages commonly referred to as "soft

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drinks," "sodas," "sports drinks" or "energy drinks."

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     (d) The following shall be exempt from the tax imposed by section 44-18.2-1:

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     (1) Beverages sweetened solely with non-caloric sweeteners;

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     (2) Coffee or tea, unless the coffee or tea is in a manufacturer's sealed bottle or other

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container;

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     (3) Any frozen, freeze-dried or other concentrate to which only water is added to produce

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a nonalcoholic beverage that is one hundred percent (100%) natural fruit juice or natural

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vegetable juice;

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     (4) Any nonalcoholic beverage that is one hundred (100%) natural fruit juice or natural

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vegetable juice;

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     (5) Any product, whether sold in liquid or powder form, that is intended by its

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manufacturer for consumption by infants and that is commonly referred to as infant formula;

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     (6) Any product, whether sold in liquid or powder form, that is intended by its

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manufacturer for use as a dietary supplement or for weight reduction; and

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     (7) Any product containing milk or milk products.

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     SECTION 2. Title 23 of the General Laws entitled "HEALTH AND SAFETY" is hereby

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amended by adding thereto the following chapter:

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     CHAPTER 88

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PREVENTION AND WELLNESS TRUST FUND

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     23-88-1. Definitions. -- As used in this chapter:

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     (1) "EOHHS" means the Rhode Island executive office of health and human services.

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     (2) "Fund" means the prevention and wellness trust fund.

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     (3) "Secretary" means the secretary of the Rhode Island executive office of health and

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human services.

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     23-88-2. Prevention and wellness trust fund established. -- There shall be established a

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separate fund to be known and cited as the prevention and wellness trust fund to be expended,

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without further appropriations, by EOHHS. The fund shall consist of revenues collected by the

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state including:

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     (1) Any revenue from appropriations or other monies authorized by the general court and

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specifically designated to be credited to the fund;

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     (2) Any fines and penalties allocated to the fund under the Rhode Island general laws;

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     (3) Any interest earned on such revenues; and

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     (4) Any funds provided from other sources.

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     23-88-3. Expenditures from the prevention and wellness trust fund. -- (a) The

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secretary, as trustee, shall administer the fund. The secretary, in consultation with the prevention

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and wellness advisory board established in section 22-88-6, shall make expenditures from the

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funds consistent with subsections (c), (d) and (e) below, provided that not more than fifteen

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percent (15%) of the amounts held in the fund in any one year shall be used by EOHHS for the

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combined cost of program administration, technical assistance to grantees or program evaluation.

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     (b) Revenues deposited in the fund that are unexpended at the end of the fiscal year shall

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not revert to the general fund and shall be available for expenditure in the following fiscal year.

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     (c) All expenditures from the fund shall support one or more of the following purposes:

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     (1) Reduce rates of the most prevalent and preventable health conditions, including

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substance abuse;

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     (2) Increase healthy behaviors;

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     (3) Increase the adoption of workplace-based wellness or health management programs

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that result in positive returns on investment for employees and employers;

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     (4) Address health disparities; or

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     (5) Develop a stronger evidence base of effective prevention programming.

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     (d) The secretary shall annually award not less than seventy-five percent (75%) of the

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fund through a competitive grant process to municipalities, community-based organization, health

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care providers, regional and dissemination of evidence-based community preventive health

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activities. To be eligible to receive a grant under this subsection, a recipient shall be:

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     (1) A municipality or group of municipalities working in collaboration;

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     (2) A community-based organization working in collaboration with one or more

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municipalities;

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     (3) A health care provider or a health plan working in collaboration with one or more

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municipalities and a community-based organization; or

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     (4) A regional planning agency.

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     Expenditures from the fund for such purposes shall supplement and not replace existing

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local, state, private or federal public health-related funding.

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     (e)(1) A grant proposal submitted under subsection (d) shall include, but not be limited

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to:

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     (i) A plan that defines specific goals for the reduction in preventable health conditions

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and health care costs over a multi-year period;

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     (ii) The evidence-based programs the applicant shall use to meet the goals;

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     (iii) A budget necessary to implement the plan, including a detailed description of any

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funding or in-kind contributions the applicant or applicants will be providing in support of the

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proposal;

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     (iv) Any other private funding or private sector participation the applicant anticipates in

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support of the proposal;

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     (v) A commitment to include women, racial and ethnic minorities and low income

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individuals; and

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     (vi) The anticipated number of individuals that would be affected by implementation of

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the plan.

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     (2) Priority may be given to proposals in a geographic region of the state with a higher

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than average prevalence of preventable health conditions, as determined by the secretary, in

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consultation with the prevention and wellness advisory board. If no proposals were offered in

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areas of the state with particular need, EOHHS shall ask for as specific request for proposals for

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that specific region. If the secretary determines that no suitable proposals have been received,

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such that the specific needs remain unmet, EOHHS may work directly with municipalities or

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community-based organizations to develop grant proposals.

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     (3) EOHHS shall, in consultation with the prevention and wellness advisory board,

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develop guidelines for an annual review of the progress being made by each grantee. Each

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grantee shall participate in any evaluation or accountability process implemented or authorized by

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EOHHS.

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     (f) The secretary may annually expend no more than ten percent (10%) of the fund to

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support the increased adoption of workplace-based wellness or health management programming,

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such as:

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     (1) Developing and distributing informational tool-kits for employers, including a model

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wellness guide developed by EOHHS;

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     (2) Providing technical assistance to employers implementing wellness programs;

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     (3) Hosting informational forums for employers;

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     (4) Promoting awareness of wellness tax credits provided through the state and federal

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government;

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     (5) Public information campaigns that quantify the importance of healthy lifestyles,

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disease prevention, care management and health-promotion programs; and

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     (6) Providing stipends or grants to employers for the implementation and administration

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of workplace wellness programs in an amount up to fifty percent (50%) of the costs associated

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with implementing the plan, subject to a cap as established by the secretary based on available

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funds.

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     (g) EOHHS shall develop guidelines to annually review progress toward increasing the

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adoption of workplace-based wellness or health management programming.

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     23-88-4. Report on expenditures. -- (a) EOHHS shall, annually, on or before January

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31, report on expenditures from the fund. The report shall include, but not be limited to:

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     (1) The revenue credited to the fund;

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     (2) The amount of fund expenditures attributable to the administrative costs of EOHHS;

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     (3) An itemized list of the funds expended through the competitive grant process and

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description of the grantee activities;

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     (4) The results of the evaluation of the effectiveness of the activities funded through

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grants; and

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     (5) An itemized list of expenditures used to support workplace-based wellness or health

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management programs.

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     (b) The report shall be provided to the chairpersons of the house and senate committees

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on health, education and welfare and shall be posted on the EOHHS's website.

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     23-88-5. Report on administration. -- (a) EOHHS shall, under the advice and guidance

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of the prevention and wellness advisory board, annually report on its strategy for administration

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and allocation of the funds, including relevant evaluation criteria. The report shall set forth the

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rationale for such strategy, including, but not limited to:

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     (1) A list of the most prevalent preventable health conditions in the state of Rhode Island,

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including health disparities experienced by populations based on race, ethnicity, gender, disability

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status, sexual orientation or socioeconomic status;

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     (2) A list of the most costly preventable health conditions in the state of Rhode Island;

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     (3) A list of evidence-based or promising community-based programs related to the

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conditions identified in subdivisions (1) and (2); and

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     (4) A list of evidence-based workplace wellness programs or health management

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programs related to the conditions in subdivisions (1) and (2).

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     (b) The report shall recommend specific areas of focus for allocation of funds. If

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appropriate, the report shall reference goals and best practices established by the national

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prevention and public health promotion council and the centers for disease control and

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prevention, including, but not limited to, the national prevention strategy, the healthy people

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report and the community prevention guide.

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     23-88-6. Prevention and wellness advisory board. -- (a) There shall be a prevention

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and wellness advisory board to make recommendations to the secretary concerning the

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administration and allocation of the fund, establish evaluation criteria and perform any other

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functions specifically granted to it by law.

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     (b) The prevention and wellness advisory board shall consist of the secretary, or a

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designee, who shall serve as chairperson; the director of the Rhode Island department of health,

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or a designee; and fourteen (14) persons to be appointed as follows:

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     (1) One representative with expertise in public health research appointed by the governor;

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     (2) One representative with expertise in the field of health equity appointed by the

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governor;

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     (3) One representative with expertise in workplace wellness programs appointed by the

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governor;

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     (4) One representative of the interest of businesses appointed by the governor;

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     (5) One public health nurse or a school nurse appointed by the governor;

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     (6) One representative appointed by the Rhode Island Medical Society;

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     (7) One representative appointed by the Hospital Association of Rhode Island;

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     (8) One representative appointed by Blue Cross Blue Shield of Rhode Island;

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     (9) One representative appointed by United Healthcare;

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     (10) One representative appointed by Neighborhood Health Plan of Rhode Island;

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     (11) One representative from a consumer health organization appointed by the speaker of

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the house of representatives;

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     (12) An administrator of an employee assistance program appointed by the speaker of the

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house of representatives;

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     (13) One representative from a statewide public health organization appointed by the

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president of the senate; and

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     (14) One representative from an association representing community health workers

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appointed by the president of the senate.

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     23-88-7. Rules and regulations. -- The secretary shall promulgate rules and regulations

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as necessary to carry out the intent of this chapter.

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     SECTION 3. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO TAXATION -- SUGAR-SWEETENED BEVERAGE TAX

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     This act would impose a tax on distributors, manufacturers and wholesalers of sugar-

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sweetened beverages, which revenue would fund the prevention and wellness trust fund. This act

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would also establish the prevention and wellness trust fund and the prevention and wellness

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advisory board.

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     This act would take effect upon passage.

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LC00824

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