Illinois General Assembly - Full Text of SB0396
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Full Text of SB0396  97th General Assembly


Sen. William Delgado

Filed: 4/1/2011





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2    AMENDMENT NO. ______. Amend Senate Bill 396 by replacing
3everything after the enacting clause with the following:
4    "Section 1. Short title. This Act may be cited as the
5Sugar-Sweetened Beverages, Syrups, and Powder Tax Act.
6    Section 5. Findings. The General Assembly finds that over
7the past 30 years, the obesity rate in the United States has
8substantially increased. The prevalence of adult obesity has
9more than doubled during that time. According to statistics
10compiled by the Centers for Disease Control, nearly 27% of
11Illinois' adult residents in 2008 were considered obese (having
12a body mass index of 30 and above) and the rate was even higher
13among African American (36.4%) and Hispanic (30.7%) residents.
14The General Assembly further finds that, for children, the
15increase in obesity has been even more dramatic, with the
16obesity rate among children ages 6-11 more than quadrupling



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1over the last 4 decades. The State of Illinois is not immune to
2the problem. 21% of Illinois children (age 0-17 years) are
3obese, the fourth worst rate in the nation.
4    The General Assembly further finds that obese children are
5at least twice as likely as non-obese children to become obese
6adults. Research indicates that the likelihood of an obese
7child becoming an obese adult increases with age; adolescents
8who are obese have a greater likelihood of being obese in
9adulthood, as compared to younger children.
10    The General Assembly further finds that the obesity
11epidemic has led to a dramatic increase in obesity-related
12health conditions, such as type 2 diabetes, asthma, and heart
13disease. These health conditions cost each of the states
14billions of dollars in health care costs and lost productivity.
15Obesity and weight-related illness accounts for $147 billion in
16health care costs nationally, or 9% of all medical spending per
17year. Obesity-related annual medical expenditures in the State
18of Illinois are estimated at $3.4 billion in 2003 dollars.
19Almost 60% of these costs are paid by public funds through
20Medicare and Medicaid.
21    The General Assembly further finds that numerous studies
22strongly support a link between obesity and consumption of
23sweetened beverages such as soft drinks, energy drinks, sweet
24teas and sports drinks. A study of a 5-year period between 1999
25and 2004 showed that children and adolescents consumed 10-15%
26of their daily caloric intake from sweetened beverages, which



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1offer little or no nutritional value and massive quantities of
2added sugars. For example, a 12-ounce can of soda contains the
3equivalent of approximately 10 teaspoons of sugar; the U.S.
4Department of Agriculture recommends that a person eating a
52,200-calorie diet should eat no more than 12 teaspoons of
6refined sugar in a day.
7    It is the intent of the General Assembly, by adopting this
8Act and creating the Illinois Health Promotion Fund, to
9diminish the human and economic costs of obesity in the State
10of Illinois. This Act is intended to discourage excessive
11consumption of sugar-sweetened beverages by increasing the
12price of these products and by creating a dedicated revenue
13source for programs designed to prevent and treat obesity and
14reduce the burden of related health conditions.
15    Section 10. Legislative intent. It is the intent of the
16General Assembly, by adopting this Act and creating the
17Illinois Health Promotion Fund, to diminish the human and
18economic costs of obesity in the State of Illinois. This Act is
19intended to discourage excessive consumption of
20sugar-sweetened beverages and to create a dedicated revenue
21source for programs designed to prevent and treat childhood
22obesity and health conditions which result from it.
23    Section 15. Definitions. For purposes of this Act:
24    "Bottle" means any closed or sealed container regardless of



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1size or shape, including, without limitation, those made of
2glass, metal, paper, or plastic, or any other material or
3combination of materials.
4    "Bottled sugar-sweetened beverage" means any
5sugar-sweetened beverage contained in a bottle that is ready
6for consumption without further processing such as, without
7limitation, dilution or carbonation.
8    "Caloric sweetener" means any caloric substance suitable
9for human consumption that humans perceive as sweet and
10includes, without limitation, sucrose, fructose, glucose, or
11other sugars. "Caloric sweetener" excludes non-caloric
12sweeteners. For purposes of this definition, "caloric" means a
13substance which adds calories to the diet of a person who
14consumes that substance.
15    "Consumer" means a person who purchases a sugar-sweetened
16beverage for consumption and not for sale to another.
17    "Department" means the Department of Revenue.
18    "Distributor" means any person, including manufacturers
19and wholesale dealers, who receives, stores, manufactures,
20bottles, or distributes bottled sugar-sweetened beverages,
21syrup, or powder, for sale to retailers doing business in the
22State, whether or not that person also sells those products to
24    "Fund" means the Illinois Health Promotion Fund
25established pursuant to Section 40.
26    "Non-caloric sweetener" means any non-caloric substance



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1suitable for human consumption that humans perceive as sweet
2and includes, without limitation, aspartame, saccharin,
3stevia, and sucralose. "Non-caloric sweetener" excludes
4caloric sweeteners. For purposes of this definition,
5"non-caloric" means a substance that contains fewer than 5
6calories per serving.
7    "Person" means any natural person, partnership,
8cooperative association, limited liability company,
9corporation, personal representative, receiver, trustee,
10assignee, or any other legal entity.
11    "Place of business" means any place where sugar-sweetened
12beverages, syrups, or powder are manufactured or received for
13sale in the State.
14    "Powder" means any solid mixture of ingredients used in
15making, mixing, or compounding sugar-sweetened beverages by
16mixing the powder with any one or more other ingredients,
17including without limitation water, ice, syrup, simple syrup,
18fruits, vegetables, fruit juice, vegetable juice, carbonation,
19or other gas.
20    "Retailer" means any person who sells or otherwise
21dispenses in the State a sugar-sweetened beverage to a consumer
22whether or not that person is also a distributor as defined in
23this Section.
24    "Sale" means the transfer of title or possession for
25valuable consideration regardless of the manner by which the
26transfer is completed.



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1    "State" means the State of Illinois.
2    "Sugar-sweetened beverage" means any nonalcoholic
3beverage, carbonated or noncarbonated, which is intended for
4human consumption and contains any added caloric sweetener. As
5used in this definition, "nonalcoholic beverage" means any
6beverage that contains less than one-half of 1% alcohol per
7volume. The term "sugar-sweetened beverage" does not include:
8        (1) beverages sweetened solely with non-caloric
9    sweeteners;
10        (2) beverages consisting of 100% natural fruit or
11    vegetable juice with no added caloric sweetener; for
12    purposes of this paragraph, "natural fruit juice" and
13    "natural vegetable juice" mean the original liquid
14    resulting from the pressing of fruits or vegetables, or the
15    liquid resulting from the dilution of dehydrated natural
16    fruit juice or natural vegetable juice;
17        (3) beverages in which milk is the primary ingredient
18    or the first listed ingredient on the label of the
19    beverage; for purposes of this Act, "milk" means natural
20    liquid milk regardless of animal or plant source or
21    butterfat content; natural milk concentrate, whether or
22    not reconstituted, regardless of animal or plant source or
23    butterfat content; or dehydrated natural milk, whether or
24    not reconstituted and regardless of animal or plant source
25    or butterfat content;
26        (4) coffee or tea without added caloric sweetener;



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1        (5) infant formula;
2        (6) medically necessary foods; and
3        (7) water to which neither carbonation nor any other
4    substance has been added, except for minerals and
5    non-caloric flavoring agents.
6    "Syrup" means a liquid mixture of ingredients used in
7making, mixing, or compounding sugar-sweetened beverages using
8one or more other ingredients including, without limitation,
9water, ice, a powder, simple syrup, fruits, vegetables, fruit
10juice, vegetable juice, carbonation, or other gas.
11    Section 20. Permit required.
12    (a) Every distributor doing business in the State shall
13file with the Department an application for a permit to engage
14in the business of receiving, storing, manufacturing,
15bottling, or distributing bottled sugar-sweetened beverages,
16syrup, or powder, for each place of business owned and operated
17by the distributor before the later of (i) the effective date
18of this Act or (ii) the distributor's first acts which
19constitute the doing of business in the State. An application
20for a permit shall be filed on forms to be furnished by the
21Department for that purpose. An application must be subscribed
22and sworn to by a person with legal authority to bind the
23business. The application shall identify the owners of the
24applicant, the applicant's mailing address, the place of
25business to which the permit shall apply, and the nature of the



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1business in which engaged, and any other information the
2Department may require for the enforcement of this Act.
3    (b) Upon receipt of an application and any permit fee
4hereafter provided for, the Department may issue to the
5applicant, for the place of business designated, a
6non-assignable permit, authorizing the sale of sugar-sweetened
7beverages, syrups, and powder in the State. No distributor
8shall sell any sugar-sweetened beverage, syrup, or powder
9without first obtaining a permit to do so under this Act.
10Permits issued pursuant to this Section shall expire on January
1131 of each year and may be renewed annually.
12    (c) A permit may not be transferred from one person to
13another, and a permit shall at all times be prominently
14displayed in a distributor's place of business. The Department
15may refuse to issue a permit to any person previously convicted
16of violations of this Act under such procedures as the
17Department may establish by rule.
18    Section 25. Tax imposed.
19    (a) There is hereby imposed an excise tax on every
20distributor for the privilege of selling the products governed
21by this Act in the State, calculated as follows.
22        (1) $1.28 per gallon/$0.01 per ounce of bottled
23    sugar-sweetened beverages sold or offered for sale to a
24    retailer for sale in the State to a consumer.
25        (2) The tax on syrup and powder sold or offered for



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1    sale to a retailer for sale in the State to a consumer,
2    either as syrup or powder or as a sugar-sweetened beverage
3    derived from that syrup or powder, is equal to $1.28 per
4    gallon/$0.01 per ounce for each gallon or ounce of
5    sugar-sweetened beverage produced from that syrup or
6    powder. For purposes of calculating the tax, the volume of
7    sugar-sweetened beverage produced from syrup or powder
8    shall be the larger of (i) the largest volume resulting
9    from use of the syrup or powder according to any
10    manufacturer's instructions or (ii) the volume actually
11    produced by the retailer, as reasonably determined by the
12    Department.
13        (3) The tax amounts set forth in this Section shall be
14    adjusted annually by the Department in proportion with the
15    Consumer Price Index for All Urban Consumers for All Items
16    for the Midwest Statistical Area, as reported by the United
17    States Bureau of Labor Statistics or any successor to that
18    index.
19    (b) A retailer that sells bottled sugar-sweetened
20beverages, syrup, or powder in the State to a consumer, on
21which the tax imposed by this Section has not been paid by a
22distributor, is liable for the tax imposed in subsection (a) at
23the time of sale to a consumer.
24    (c) The tax imposed by this Act is in addition to all other
25occupation or privilege taxes imposed by the State of Illinois,
26by any political subdivision thereof, or by any municipal



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2    Section 30. Report of sales and tax remittances.
3    (a) Any distributor or retailer liable for the tax imposed
4by this Act shall, on or before the last day of March, June,
5October, and December of each year, return to the Department
6under oath of a person with legal authority to bind the
7distributor or retailer, a statement containing its name and
8place of business, the quantity of sugar-sweetened beverages,
9syrup, and powder subject to the excise tax imposed by this Act
10sold or offered for sale in the preceding calendar quarter, and
11any other information required by the Department, along with
12the tax due.
13    (b) The State Treasurer shall credit the proceeds of the
14tax to the Illinois Health Promotion Fund.
15    Section 35. Records of distributors. Every distributor and
16every retailer subject to this Act shall maintain for not less
17than 2 years accurate records, showing all transactions that
18gave rise, or may have given rise, to tax liability under this
19Act. Such records are subject to inspection by the Department
20at all reasonable times during normal business hours.
21    Section 40. Establishment of Illinois Health Promotion
22Fund. There is hereby created a trust fund in the State
23treasury called the Illinois Health Promotion Fund. Fifty



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1percent of moneys collected pursuant to the taxes imposed by
2this Act, and all interest on those moneys, shall be paid into
3the Illinois Health Promotion Fund. All costs to implement this
4Act shall be paid from the Illinois Health Promotion Fund.
5    Section 45. Expenditure of Illinois Health Promotion Fund.
6    (a) All moneys in the Illinois Health Promotion Fund, after
7tax administration costs have been deducted, shall be
8appropriated and allocated as follows:
9        (1) Twenty percent to the Illinois Department of Public
10    Health to coordinate grants to State-certified public
11    health departments to improve public health
12    infrastructure. Funded projects will improve workforce and
13    systems development, chronic disease surveillance and
14    monitoring systems, chronic disease program evaluation,
15    and regional coordination that includes networking,
16    coordination, standardization, and cross-jurisdictional
17    cooperation for the efficient delivery of public health
18    services (e.g., resource sharing) to ensure that public
19    health goals are effectively and efficiently met.
20        (2) Thirty percent for community-based childhood
21    obesity prevention programs. This funding shall support
22    programs that use educational, environmental, policy, and
23    other public health approaches that achieve the following
24    goals: eliminate racial, ethnic, and socioeconomic
25    disparities in childhood obesity rates; improve access to



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1    and consumption of healthy, safe, and affordable foods;
2    reduce access to and consumption of calorie-dense,
3    nutrient-poor foods; encourage physical activity; decrease
4    sedentary behavior; and raise awareness about the
5    importance of nutrition and physical activity to childhood
6    obesity prevention. The Illinois Director of Public Health
7    shall be responsible for the distribution of these funds to
8    community-based organizations and to State-certified
9    public health departments, with priority given to
10    counties, municipalities, and other geographic
11    jurisdictions that have childhood obesity prevention
12    coalitions to build broad-based support for childhood
13    obesity prevention.
14        (3) Thirty percent to elementary and secondary schools
15    for educational, environmental, policy, and other public
16    health approaches that promote nutrition and physical
17    activity. The approaches funded pursuant to this
18    subsection can include improving or building school
19    recreational facilities that are used for recess and
20    physical education; providing continuing education
21    training for physical education teachers; hiring qualified
22    physical education teachers; implementing policies that
23    encourage walking and biking to and from school (i.e.
24    school siting, school travel plans); improving the quality
25    and nutrition of school breakfasts, lunches, and snacks;
26    ensuring free, clean drinking water access throughout the



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1    school day; and incorporating practical nutrition
2    education into the curriculum. The State Board of Education
3    is responsible for the allocation and distribution of these
4    funds.
5        (4) Ten percent for chronic disease prevention and
6    treatment programs. Funding shall be focused on
7    prevention, treatment, and community-based services to
8    expand clinical disease prevention and management care.
9    Funding shall support medicaid reimbursement for pediatric
10    specialty care services to improve access for children to
11    medical services. The Director of Public Health shall be
12    responsible for identifying activities and allocating
13    these funds.
14        (5) Ten percent to fund oral health treatments and
15    services to underserved populations. The funds shall be
16    used for the development of new clinics in high need areas
17    throughout Illinois, medicaid reimbursements for direct
18    services with a focus on preventative dental services such
19    as semi-annual office visits and teeth cleaning, and
20    salaries for dentists. The Director of Public Health shall
21    be responsible for coordinate grants to distribute funds.
22    (b) All moneys in the Children's Health Promotion Fund
23shall be expended only for the purposes expressed in this Act,
24and shall be used only to supplement existing levels of service
25and not to supplant current federal, state, or local funding
26for existing levels of service.



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1    (c) The Illinois Director of Public Health and the Illinois
2State Board of Education are hereby empowered to make such
3rules and regulations, and provide such procedural measures, as
4shall bring into effect the purposes of this Section. The rules
5and regulations may provide for specific programs to be funded
6consistent with the allocation of funds set forth above.
7    Section 50. Exemptions. The following are exempt from the
8tax imposed by this Act:
9        (1) Bottled sugar-sweetened beverages, syrups, and
10    powder sold to the United States Government and American
11    Indian Tribal Governments.
12        (2) Bottled sugar-sweetened beverages, syrups, and
13    powder sold by a distributor or a retailer expressly for
14    resale or consumption outside the State.
15        (3) Bottled sugar-sweetened beverages, syrups, and
16    powder sold by a distributor to another distributor that
17    holds a permit issued pursuant to Section 20 of this Act,
18    if the sales invoice clearly indicates that the sale is
19    exempt. If the sale is to a person who is both a
20    distributor and a retailer, the sale shall also be tax
21    exempt and the tax shall be paid when the purchasing
22    distributor-retailer resells the product to a retailer or a
23    consumer. This exemption does not apply to any other sale
24    to a retailer.



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1    Section 55. Penalties.
2    (a) Any person subject to the provisions of this Act who
3fails to pay the entire amount of tax imposed by this Act by
4the date that payment is due, fails to submit a report or
5maintain records required by this Act, does business in the
6State without first obtaining a permit as required by this Act,
7or violates any other provision of this Act or rules and
8regulations promulgated by the Department for the enforcement
9of this Act, shall be guilty of a misdemeanor and shall also be
10liable for the penalties set forth and incorporated by
11reference into this Section.
12    (b) Incorporation by reference. All of the provisions of
13Sections 4, 5, 5a, 5b, 5c, 5d, 5e, 5f, 5g, 5h, 5i, 5j, 6, 6a,
146b, 6c, 8, 9, 10, 11, 11a, and 12 of the Retailers' Occupation
15Tax Act, and all applicable provisions of the Uniform Penalty
16and Interest Act that are not inconsistent with this Act, apply
17to distributors of sugar-sweetened beverages to the same extent
18as if those provisions were included in this Act. References in
19the incorporated Sections of the Retailers' Occupation Tax Act
20to retailers, to sellers, or to persons engaged in the business
21of selling tangible personal property mean distributors,
22retailers, or both when used in this Act. References in the
23incorporated Sections to sales of tangible personal property
24mean sales of sugar-sweetened beverages, syrups, or powder when
25used in this Act.



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1    Section 60. Unpaid taxes a debt. All taxes and penalties
2imposed under the provisions of this Act remaining due and
3unpaid shall constitute a debt to the State, which may be
4collected from the person owing the same by suit or otherwise.
5    Section 65. Records of Department. At the end of each
6month, the State Auditor General shall check the books and
7records of the Department and its accounts with any bank or
8banks, and shall verify the amounts collected pursuant to this
9Act and paid into the Children's Health Promotion Fund. Any
10duty herein required of the State Auditor General may be
11performed by any duly trained clerk in his office, designated
12by the State Auditor General for that purpose.
13    Section 70. Exercise of powers and duties. Whenever in this
14Act any reference is made to any power or duty of the
15Department, the reference is construed to mean that the power
16or duty shall be exercised by the Department, under the
17supervision and direction of the Director of Revenue.
18    Section 75. Rules and regulations. The Department is hereby
19empowered to adopt rules, and provide such procedural measures,
20in cooperation with the State Auditor General, as may be
21reasonably necessary to accomplish the purposes of this Act.
22    Section 80. Severability. If any provision of this Act, any



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1rule or regulation made under this Act, or the application of
2this Act to any person or circumstance is held invalid by any
3court of competent jurisdiction, the remainder of the Act,
4rule, or regulation, and the application of the provision to
5other persons or circumstances shall not be affected. The
6invalidity of any Section or Sections or parts of any Section
7of this Act shall not affect the validity of the remainder of
8the Act.
9    Section 100. The State Finance Act is amended by adding
10Section 5.786 as follows:
11    (30 ILCS 105/5.786 new)
12    Sec. 5.786. The Illinois Health Promotion Fund.
13    Section 999. Effective date. This Act takes effect January
141, 2012.".