HB 1679-FN-A – AS INTRODUCED
2010 SESSION
09/10
HOUSE BILL 1679-FN-A
AN ACT establishing a soft drinks tax.
SPONSORS: Rep. Mulholland, Graf 10; Rep. Pastor, Graf 9
This bill establishes a soft drinks tax. Revenues from the tax shall be deposited in a fund dedicated to obesity prevention and treatment programs.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
10-2433
09/10
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Ten
AN ACT establishing a soft drinks tax.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Subparagraph; Special Fund. Amend RSA 6:12, I(b) by inserting after subparagraph (299) the following new subparagraph:
(300) Moneys deposited in the obesity prevention and treatment fund established under RSA 83-G:13.
2 New Chapter; Soft Drinks Tax. Amend RSA by inserting after chapter 83-F the following new chapter:
CHAPTER 83-G
SOFT DRINKS TAX
83-G:1 Definitions. In this chapter:
I. “Bottled soft drinks” means any and all nonalcoholic beverages, whether carbonated or not, such as soda water, ginger ale, Coca Cola, lime cola, Pepsi Cola, Doctor Pepper, root beer, carbonated water, orangeade, lemonade, fruit juice when any plain or carbonated water, flavoring or syrup is added, or any and all preparations commonly referred to as “soft drinks” of whatever kind, which are closed and sealed in glass, paper, or any other type of container, envelope, package, or bottle, whether manufactured with or without the use of any syrup. The term “bottled soft drinks” shall not include fluid milk to which no flavoring has been added, or natural undiluted fruit juice or vegetable juice.
II. “Commissioner” means the commissioner of the department of revenue administration.
III. “Department” means the department of revenue administration.
IV. “Distributor” means any person who manufactures, bottles, produces, or purchases for sale to retail dealers any bottled soft drink or soft drink syrup.
V. “Natural undiluted fruit juice” shall mean the liquid resulting from the pressing of fruit with or without sweetener being added, or the liquid resulting from the reconstitution of natural fruit juice concentrate by the restoration of water to dehydrated natural fruit juice with or without sweetener being added.
VI. “Natural undiluted vegetable juice” shall mean the liquid resulting from the pressing of vegetables with or without sweetener being added or the liquid resulting from the reconstitution of natural vegetable juice concentrate by the restoration of water to dehydrated natural vegetable juice with or without sweetener being added.
VII. “Person” shall mean and include an individual, firm, partnership, association, or corporation.
VIII. “Retail dealer” includes every person other than a wholesale dealer mixing, making, compounding, or manufacturing any drink from a soft drink syrup or powder base, or a person selling such syrup or powder.
IX. “Simple syrup” shall mean the making, mixing, compounding, or manufacturing, by dissolving sugar and water or any other mixtures that will create simple syrup to which may or may not be added concentrates or extracts.
X. “Soft drink syrups and powders” shall include the compound mixture or the basic ingredients, whether dry or liquid, practically and commercially usable in making, mixing, or compounding soft drinks by the mixing thereof with carbonated or plain water, ice, fruit, milk, or any other product suitable to make a soft drink, among such syrups being such products as Coca Cola syrup, Pepsi Cola syrup, Doctor Pepper syrup, root beer syrup, nu-grape syrup, lemon syrup, vanilla syrup, chocolate syrup, cherry smash syrup, rock candy syrup, simple syrup, chocolate drink powder, malt drink powder, or any other prepared syrups or powders sold or used for the purpose of mixing soft drinks commercially at soda fountains, restaurants or similar places as well as those powder bases prepared for the purpose of domestically mixing soft drinks such as Kool Aid and all other similar products.
XI. “Sweetener” shall mean sugar only, artificial or natural, which singularly flavors the taste of a natural undiluted fruit juice or natural undiluted vegetable juice.
XII. “Wholesale dealer” includes only those persons who sell any bottled soft drink or soft drink syrup to retail dealers for the purpose of resale.
83-G:2 Tax on Bottled Soft Drinks, Soft Drink Syrups, and Powders.
I. A tax is hereby levied and imposed upon the sale, use, handling, or distribution of all bottled soft drinks and all soft drink syrups and powders, whether manufactured within or without this state, as follows:
(a) On each bottled soft drink, a tax of 2 percent of the unit price.
(b) On each gallon of soft drink syrup, a tax of 80 cents, and in like ratio on each part gallon thereof, or on each 4 liters of soft drink syrup a tax of 84 cents, and in like ratio on each part 4 liters thereof.
(c) On each ounce by weight of powder or fraction thereof used for making soft drinks, a tax of one cent or on each 28.35 grams, or fraction thereof, a tax of one cent.
II. Any person manufacturing or producing within this state any bottled soft drink or soft drink syrup for sale within this state and any distributor, wholesale dealer or retail dealer or any other person who is the original consignee of any bottled soft drink or soft drink syrup manufactured or produced outside this state, or who brings such drinks or syrups into this state, shall be liable for the tax imposed under this section. The tax hereby imposed shall not be collected more than once in respect to any bottled soft drink or soft drink syrup manufactured, sold, used, or distributed in this state.
83-G:3 Affixing of Tax Stamps or Tax Crowns.
I. The payment of the taxes provided in this chapter shall be evidenced by the affixing of soft drink tax stamps or tax crowns to the original containers or bottles in which any bottled soft drink or syrup is placed, received, stored, or handled. Such stamps or crowns, of the appropriate denomination, shall be affixed to each container of syrup and to each bottled soft drink by the person who under the provisions of this chapter is first required to pay the tax thereon, within 24 hours after such person has such bottled soft drink or syrup in his or her possession for the first time. The provisions of this paragraph shall not apply to syrup used by bottlers in the manufacture of bottled soft drinks, or to bottled soft drinks or syrups which are transported through this state and which are not sold, delivered, used, or stored in this state, if transported in accordance with such rules as may be adopted by the commissioner under RSA 541-A, or to any bottled drink or syrup which is manufactured in this state and sold to a purchaser outside this state.
II. Except as otherwise provided in this section, it shall be unlawful for any person to sell, use, handle, or distribute any bottled soft drink or soft drink syrup to which the tax stamps or tax crowns required by this section are not affixed, and any person who shall violate this provision shall be guilty of a misdemeanor.
83-G:4 Cancellation and Removal of Stamps. Any person subject to the tax imposed by this chapter who affixes a soft drink stamp to a container shall be required to immediately cancel the stamp by writing or marking initials thereon and the date upon which the stamp was affixed. When any container to which a stamp has been affixed is emptied, the person emptying the same or on whose behalf the same has been emptied shall be required to immediately remove or deface the tax stamp thereon.
83-G:5 Disposition of Unused Crowns; Penalty for Violation.
I.(a) Unused tax crowns upon which the tax imposed by this article has not been paid and which the original purchaser has not used and does not intend to use, and which are fit for use, shall be disposed of in the following manner only:
(1) By returning same to the manufacturer thereof and receiving from such manufacturer a certificate which shall indicate the name of the person returning the crowns, the date of return, and the number and denominations of crowns returned; or
(2) By transferring such crowns to any person and receiving in exchange therefor a certificate issued by the commissioner authorizing the transferee to acquire such crowns.
(b) Upon receipt of either such certificate the commissioner shall credit the account of the original purchaser in the amount indicated by the certificate.
II. In the event of the disposition of such crowns in a manner not authorized by this section, the original purchaser thereof or his or her estate, and/or any person, whether acting in an official capacity or otherwise, who shall make such unauthorized disposition shall be liable for the amount of tax which the crowns represent; and, in addition, shall be guilty of a misdemeanor.
83-G:6 Purchase of Tax Stamps or Tax Crowns; Discounts and Commissions; Refunds.
I. The commissioner shall adopt rules governing the design, purchase, sale and distribution of tax stamps and tax crowns required by this chapter. Manufacturers or distributors of crowns may be required to furnish bond to ensure faithful compliance with such rules. Any person desiring to purchase such crowns shall obtain from the commissioner an authorization to do so, which shall specify the number of crowns to be purchased, and upon shipment thereof the manufacturer shall transmit to the commissioner a copy of the invoice of such shipment. The commissioner shall not authorize the purchase of crowns by any person who is in default in the payment of any tax required by this chapter.
II. The commissioner shall sell the stamps required by this chapter, or may authorize any sheriff, or any bank or trust company in this state, to sell such stamps as his or her deputy, and may allow as a commission a fee of ½ of one percent of the face value of all stamps sold by such deputy. In the sale of such stamps the commissioner shall allow the following discounts: On a sale of less than $25, no discount; on a sale of $25 or over and less than $50, a discount of 5 percent; and on a sale of $50 or more, a discount of 10 percent.
III. In the case of stamps, the tax imposed by this article shall be paid in advance at the time the stamps are purchased. In the case of tax crowns, the tax shall be paid in advance at the time the commissioner authorizes the purchase of such tax crowns, unless the purchaser applies for and obtains credit as provided in paragraph IV.
IV. Whenever any person applies for an authorization to purchase tax crowns, he or she may apply for an extension of credit on the tax due with respect to such crowns, and if he or she files a bond in the form prescribed by the commissioner, with satisfactory corporate surety, in an amount not less than 25 percent more than the tax due with respect to the tax crowns to be purchased, the commissioner shall issue the necessary authorization. Any person who obtains such credit shall, on or before the fifteenth day of each month, file with the commissioner on forms prescribed by him or her a return stating the number of tax crowns used by such person during the preceding month, and he or she shall at the same time pay to the commissioner the tax due on the crowns so used.
V. The commissioner shall allow to each purchaser of tax crowns, whether for cash or credit, a discount of 12 1/2 percent of the tax value of such crowns. Such discount, and the discount allowed on the sale of tax stamps, shall be in lieu of the allowance of any claim for refund by reason of the breakage or destruction of containers stamped or crowned as provided in this chapter, the spoilation of the soft drinks or syrups, or the loss or destruction of tax stamps or tax crowns; provided, that when the tax stamps or crowns or soft drinks, soft drink powders, or soft drink syrups, upon which tax has been paid are destroyed by fire, lightning, or flood and when soft drinks, syrups, or powders upon which tax has been paid are exported from this state or are required to be destroyed pursuant to federal or state order, the taxpayer may file a claim for refund for an amount equal to the amount of tax actually paid for such stamps or crowns. The commissioner shall cause a refund to be made under this section only when a claim for refund is filed within 180 days from the date the tax stamps or crowns were destroyed or the soft drink product upon which tax was paid were destroyed or exported from this state. Any claim for refund not timely filed shall not be construed to be or to constitute a moral obligation of this state for payment. At the election of the taxpayer, the amount of any refund may be established as a credit.
83-G:7 Due Date of Reports; Additional Reports; Extension of Time.
I. Every person subject to the tax imposed by this chapter shall on or before the fifteenth day of each month make and file with the commissioner a report of such person’s operations for the preceding month to verify liability for tax under this chapter. This report shall be in a form prescribed by the tax commissioner.
II. The commissioner may by 15 days’ written notice require the filing of such additional reports as he or she deems necessary to verify a person’s liability under this chapter.
III. Upon written application setting forth good cause, the commissioner may extend the time for filing such reports or additional reports on such terms and conditions as he or she may require.
83-G:8 Additional Penalty for Late Filing or Payment. In addition to the additions to tax, penalties and interest authorized in RSA 21-J, if any taxpayer fails to file a return or pay the proper amount of tax within the time specified herein, the commissioner shall refuse to authorize the purchase of tax stamps or crowns by the delinquent taxpayer; provided, that if the failure to pay was due to reasonable cause, the commissioner may waive this penalty. The taxpayer may request a hearing within 60 days after service of notice of the refusal of the commissioner to authorize the purchase of the tax stamps or crowns. Upon receipt of a written request for a hearing filed within the time prescribed the provisions for hearing and appeal under RSA 21-J shall be applicable.
83-G:9 Seizure and Sale of Soft Drink Syrups by Commissioner; Forfeiture; Collection of Tax. Whenever the commissioner or any of his or her duly authorized agents shall discover any soft drink syrups, subject to tax as provided by this chapter and upon which the tax has not been paid as herein required, the commissioner or his or her duly authorized agent is hereby authorized and empowered to seize and take possession of such soft drink syrups, which shall thereupon be deemed to be forfeited to the state, and the commissioner shall within a reasonable time thereafter sell such forfeited soft drink syrups; and from the proceeds of such sale shall collect the tax and interest due thereon, together with a penalty of 50 percent of the tax due and the cost incurred in such proceedings, and pay the balance, if any, to the person in whose possession such soft drink syrups were found; provided that such seizure and sale shall not be deemed to relieve any person from fine or imprisonment provided herein for violation of any provision of this chapter. Such sale shall be made in the county where most convenient and economical. Notice of such sale shall be published in a newspaper and the publication area for such publication shall be the county wherein such seizure was made and the county wherein the sale is to take place. Notice shall be published at least 5 days prior to the sale. All moneys collected under the provisions of this section shall be paid into the state obesity prevention and treatment fund and treated as other taxes collected under this chapter.
83-G:10 Altering, Counterfeiting or Reusing Tax Stamps or Tax Crowns; Penalty. Any person who falsely or fraudulently makes, forges, alters, or counterfeits any tax stamp or tax crown prescribed by the commissioner under the provisions of this chapter, or who knowingly or willfully utters, passes, or tenders as true any such false, altered, forged, or counterfeited stamp or crown, or who uses more than once any stamp or crown for the purpose of evading the tax imposed by this chapter, shall be guilty of a class B felony.
83-G:11 Penalties; Crimes. Any person who violates any of the provisions of this chapter or any lawful rule adopted by the commissioner under the authority of this chapter, for the violation of which no other penalty is provided by law, shall be guilty of a misdemeanor.
83-G:12 Rulemaking. The commissioner shall adopt rules, under RSA 541-A, relative to:
I. The form and method of the payment of tax required by this chapter, including the design, purchase, sale, and distribution of tax stamps and tax crowns.
II. The administration of the soft drinks tax.
III. The recovery of any tax, fee, or penalties imposed pursuant to this chapter or RSA 21-J.
83-G:13 Obesity Prevention and Treatment Fund. There is established within the office of the state treasurer a separate, nonlapsing fund to be known as the obesity prevention and treatment fund. All taxes collected by the commissioner under this chapter shall be deposited by the state treasurer in this fund. This fund shall be continually appropriated to the department of health and human services for obesity prevention and treatment programs.
3 Effective Date. This act shall take effect July 1, 2010.
LBAO
10-2433
Revised 01/25/10
HB 1679 FISCAL NOTE
AN ACT establishing a soft drinks tax.
FISCAL IMPACT:
The Department of Health and Human Services states this bill may increase state restricted revenue by $11,600,000 in FY 2011 and each year thereafter and state expenditures by $161,841 in FY 2011, $162,414 in FY 2012, $170,531 in FY 2013, and $179,124 in FY 2014. The Department of Revenue Administration, Judicial Branch, Judicial Council, Department of Justice, Department of Corrections, and New Hampshire Association of Counties state this bill may increase state restricted revenue and state and county expenditures by indeterminable amounts in FY 2011 and each year thereafter. There will be no fiscal impact on county and local revenue or on local expenditures.
METHODOLOGY:
The Department of Health and Human Services states this bill adds RSA chapter 83-G to establish a soft drinks tax to be paid to the Department of Revenue Administration by manufacturers and distributors of sugar sweetened beverages, soft drinks (2% per unit), syrups (80 cents per gallon, and powders (1 cent per ounce.) Fees shall be deposited in a non-lapsing fund with the Treasurer to be continually appropriated to the Department of Health and Human Services for obesity prevention and treatment programs. Based on the fee structure of West Virginia, which is similar to that proposed in this bill and the ratio of the population between the two states, the Department estimates state restricted revenue would increase by $11,600,000 per year ($16,000,000 [WV soft drink tax revenue] × 72.5% [NH population as a % of WV population]). The Department assumes the requirements of the bill would entail substantial development of proposals and contracts for obesity prevention and treatment programming, the associated contract management and monitoring, and overall financial management, for which the Department estimates the need to hire a full-time program specialist III (labor grade 23). The Department states content expertise for obesity prevention could be absorbed within the existing budget of the Department’s obesity prevention program; however some of the unit’s current responsibilities could be delayed or suspended as a result. The Department also states it does not currently employ anyone with the expertise in obesity treatment necessitated by this bill, so an additional full-time program planner III (labor grade 25) position to coordinate obesity treatment would also be needed. In addition to the salary and benefits for these two new positions, the Department estimates funding would also be needed for current expenses and supplies, equipment, rent, and in-state and out-of-state travel. The total increase in expenditures estimated by the Department is:
FY 2011 FY 2012 FY 2013 FY 2014
Salary and Benefits $131,189 $138,322 $145,986 $154,113
Current expense $4,000 $4,000 $4,000 $4,000
Equipment $7,000 $0 $0 $0
Travel $5,000 $5,000 $5,000 $5,000
Rent $14,652 $15,092 $15,545 $16,011
Total $161,841 $162,414 $170,531 $179,124
The Department of Revenue Administration states the increases in revenue and expenditures are indeterminable because it states this bill cannot be administered as written, due to its concerns over the lack of a definition for the often-used term “tax crown”, over the provision authorizing “any sheriff, or bank or trust company in this state, to sell such [tax] stamps”, and over the potential question of payment responsibility between wholesalers and manufacturers. The Department states lack of unit pricing information, complications regarding in-state versus out-of-state sales, and different pricing structures across wholesalers and retailers make it impossible for it to develop a revenue estimate. The Department states cost increases associated with this bill would be due to creating the appropriate tax returns, programming changes to the computer system, public education, and new enforcement duties, although it cannot estimate more specific amounts. The Department also points out its concern for both itself and taxpayers to comply with the bill given such a short period of lead time.
The Judicial Branch states several sections could have a fiscal impact on the Branch, including the following: proposed RSA 83-G:3, II, which makes it an unspecified misdemeanor to sell or use untaxed soft drinks; proposed RSA 83-G:5, II, which makes it an unspecified misdemeanor to improperly dispose of unused tax crowns; proposed RSA 83-G:8, which makes the penalty and appeal procedures of RSA chapter 21-J applicable to failure to pay the soft drinks tax in a timely manner; proposed RSA 83-G:10, which makes altering, counterfeiting or reusing tax stamps or tax crowns a class B felony; and proposed RSA 83-G:11, which makes a violation of any of the provisions of the chapter or rules adopted under it an unspecified misdemeanor. Misdemeanor charges can be either a class A or class B, with the presumption they will be class B in accordance with RSA 625:9,IV. However, the Branch has no information to estimate how many new class B felonies or misdemeanors would be brought as a result of this bill or if those misdemeanors would be a class A or class B. The Branch states the average cost of a routine felony case is $335.98, a class A misdemeanor case is $51.14, and a class B misdemeanor case is $36.89 in FY 2011 and each year thereafter. The Branch also states this bill could result in tax appeals to the superior court, which are classified as routine equity cases with an average cost of $184.21, but cannot provide an estimate of the potential new cases. The possibility of appeals in all of these instances increases the likelihood the fiscal impact on the Branch will exceed $10,000. Given the range of potential fiscal impacts, the Branch estimates it is likely this bill will have an impact greater than $10,000 per year.
The Judicial Council states to the extent an unspecified misdemeanor results in a misdemeanor offense where the right to counsel exists this bill may result in an indeterminable increase in general fund expenditures. The Council states if an individual is found to be indigent, the flat fee of $275 per misdemeanor is charged by a public defender or contract attorney. If an assigned counsel attorney is used the fee is $60 per hour with a cap of $1,400 for a misdemeanor charge. The Council also states additional costs could be incurred if an appeal is filed. The public defender, contract attorney and assigned counsel rates for Supreme Court appeals is $2,000 per case, with many assigned counsel attorneys seeking permission to exceed the fee cap. Requests to exceed the fee cap are seldom granted. Finally, expenditures would increase if services other than counsel are requested and approved by the court during the defense of a case or during an appeal.
The Department of Justice states the criminal offenses created by this bill are typically prosecuted by a local prosecutor or county attorney’s office. If an appeal is filed, the Department may have increased expenditures; however, such appeals would likely be absorbed by existing resources. The Department is unable to estimate how many cases would be prosecuted by the Department or appealed to the Supreme Court.
The Department of Corrections states the average annual cost of incarcerating an individual in the general prison population for the fiscal year ending June 30, 2009 was $33,110. The cost to supervise an individual by the Department’s division of field services for the fiscal year ending June 30, 2009 was $744. The Department states this bill may increase expenditures by an indeterminable amount, but is unable to predict the number of individuals that might be impacted.
The New Hampshire Association of Counties states to the extent an individual is prosecuted, convicted, and sentenced to incarceration, the counties may have increased expenditures. The Association is unable to determine the number of individuals who might be detained or incarcerated as a result of this bill. The average cost to incarcerate an individual in a county facility is $35,342 a year.
This bill does not appropriate funds or add new positions.