SWEET Act
Bill: H.R.2772 | Sponsor: Rep. DeLauro, Rosa L. (D-CT)
Policy area: Taxation

Summary:
Sugary Drinks Tax Act of 2021 or the SWEET Act
This bill imposes an excise tax on the sale or transfer of any specified sugary drink product. The bill defines specified sugary drink product as any liquid intended for human consumption that contains a caloric sweetener (i.e., monosaccharides, disaccharides, and high-fructose corn syrup), with specified exceptions. The bill provides for the transfer of revenues from the tax for the benefit of the School Breakfast Program.

To amend the Internal Revenue Code of 1986 to impose an excise tax on 
     sugary drinks, to dedicate the revenues from such tax to the 
 prevention, treatment, and research of diet-related health conditions 
  in disproportionately impacted populations, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Sugary Drinks Tax Act of 2021'' or 
as the ``SWEET Act''.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--The Congress finds that:
            (1) The prevalence of obesity in the United States has 
        increased dramatically over the past 40 years. From the 1960s 
        to the late 1970s, the prevalence was relatively constant, with 
        about 15 percent of the population classified as obese. After 
        the 1970s, these rates began to climb. According to the Centers 
        for Disease Control and Prevention, well over one-third of 
        adults--42.4 percent (2017-18)--and 18.5 percent (2015-2016) of 
        youth in the United States were obese. Although no group has 
        escaped the epidemic, low-income people and communities of 
        color are disproportionately affected. Nearly half (49.6 
        percent) of African-American adults were obese and 44.8 percent 
        of Hispanic adults were obese in 2017-2018.
            (2) The percentage of children who are overweight has also 
        increased dramatically in recent decades. After being 
        relatively constant from the 1960s to the 1970s, the prevalence 
        of overweight children has more than tripled among children 
        between 6 and 11 years of age and nearly quadrupled among those 
        between 12 and 19 years of age. Despite significant public and 
        private investment, childhood obesity rates among young people 
        aged 2-19 remain high affecting about 13.7 million children.
            (3) There are significant racial and age disparities in 
        obesity prevalence among children and adolescents. In 2015-
        2016, obesity prevalence was higher among Hispanics (25.8 
        percent) and non-Hispanic Black youth (22.0 percent) than non-
        Hispanic White youth (14.1 percent). The prevalence of obesity 
        was lower in non-Hispanic Asian youth (11.0 percent) than in 
        youth who were non-Hispanic White, non-Hispanic Black, or 
        Hispanic.
            (4) Overweight and obesity are responsible for an estimated 
        $190 billion in health care costs nationally, or approximately 
        five to ten percent of all medical spending--with more than 20 
        percent of these costs paid publicly through the Medicare and 
        Medicaid programs. The medical costs for people with obesity 
        are dramatically higher than those without obesity.
            (5) The obesity epidemic is of particular concern because 
        obesity increases the risk of diabetes, heart disease, certain 
        types of cancer, arthritis, asthma, and breathing problems. 
        Depending on their level of obesity, from 60 percent to more 
        than 80 percent of obese adults have type 2 diabetes, high 
        blood cholesterol, high blood pressure, or other related 
        conditions. According to the CDC, nearly 60 percent of 
        overweight children have at least one risk factor for heart 
        disease.
            (6) Overweight and obesity increase the risk for several 
        types of common cancers, including postmenopausal breast, 
        colorectal, endometrial, kidney, pancreatic, esophageal, and 
        gall bladder cancer. Up to one in four of all cancer cases and 
        one in three cancer deaths are due to poor nutrition, physical 
        inactivity, and overweight and obesity.
            (7) There is overwhelming evidence of the link between the 
        consumption of sugary drinks, such as non-diet soft drinks, 
        energy drinks, sweet teas, and sports drinks, and obesity and 
        diabetes. Sugary drinks are the only food or beverage shown to 
        increase the risk of overweight and obesity. Adults who drink 
        one sugary drink or more per day are 27 percent more likely to 
        be overweight or obese, regardless of income or ethnicity. 
        After six months, daily consumption of one liter of sugary 
        drinks increases fat deposits in the liver by 150 percent, 
        which directly contributes to both diabetes and heart disease. 
        Over 10 years, about two million type 2 diabetes cases in the 
        United States are attributable to consumption of sugary drinks.
            (8) According to nutrition experts, sugary drinks, such as 
        soft drinks, energy drinks, sweet teas, and sport drinks, offer 
        little or no nutritional value, but massive quantities of added 
        sugars. A 20-ounce bottle of soda contains about 16 teaspoons 
        of sugars. Yet, the American Heart Association recommends that 
        Americans consume no more than six to nine teaspoons of sugar 
        per day from all food and beverage sources.
            (9) The 2020 Dietary Guidelines states that sugary drinks 
        are the top source of added sugars in the American diet. For 
        adults, sugary drinks (e.g., soda, sports drinks, energy 
        drinks, fruit drinks) and sweetened coffees and teas (including 
        ready-to-drink varieties) contribute over 40 percent of daily 
        intake of added sugars. In childhood, sugary drinks make up 
        about 15 to 25 percent of total added sugars intake. By 
        adolescence, their contribution is 32 percent and even higher 
        when considering coffee and tea beverages with added sugars (an 
        additional 7 percent). The Dietary Guidelines Advisory 
        Committee recommended that no more than 6 percent of daily 
        calories come from added sugars.
            (10) Though sugary drink consumption is declining modestly 
        as people learn about their harmful health effects, Americans 
        are still consuming twice as much of these products as they did 
        in the 1970s. Reports show that in recent years sugary drink 
        purchasing has only gone down 6 calories per person per day 
        since 2014. Five percent of Americans consume at least 567 kcal 
        from sugar drinks on any given day--equal to more than four 12-
        ounce cans of soft drink. On average, children consume more 
        than 30 gallons of sugary drinks every year. This is enough to 
        fill a bathtub.
            (11) In a study of more than 50,000 female nurses, women 
        who increased their sugary drink consumption from no more than 
        one per week to at least one per day gained an average of 10 
        pounds over four years. Research also shows a significant link 
        between sugary drink consumption and weight gain in children. 
        In a randomized double-blind controlled trial of roughly 640 
        children, those who were given one 8-ounce serving of a sugary 
        drink a day gained more weight and body fat over 1\1/2\ years 
        than those who got one 8-ounce serving of a sugar-free drink.
            (12) Sugary drinks are a unique contributor to excess 
        caloric consumption. A large body of research shows that 
        calories from sugary drinks do not satisfy hunger the way 
        calories from solid food or fat or protein-containing beverages 
        such as those containing milk and plant-based proteins. As a 
        result, sugary drinks tend to add to the calories people 
        consume rather than replace calories from other foods and 
        beverages.
            (13) Overweight children have a much greater chance of 
        being obese as adults, with all the health risks that entails.
            (14) Type 2 diabetes, previously only seen among adults, is 
        now increasing among children. Data show that almost a quarter 
        of teens now have either diabetes or prediabetes. If the 
        current trends are not reversed, it is predicted that one in 
        three children and nearly one-half of Latino and African-
        American children born in the year 2000 will develop type 2 
        diabetes in their lifetime.
            (15) A 2015 review found that increasing sugary drink 
        consumption by one serving per day increased the risk of heart 
        disease by 17 percent and hypertension by 8 percent. In 2012, 
        50,000 deaths were associated with drinking too many sugary 
        drinks. Of that, 40,000 deaths in the U.S. were attributed to 
        heart problems and 10,000 deaths were attributed to type 2 
        diabetes caused specifically by consuming too many sugary 
        drinks.
            (16) Tooth decay (dental caries) is the single most common 
        chronic childhood disease, experienced by more than one-fourth 
        of United States children aged 2-5 years and half of those aged 
        12-15 years. About half of all children and two-thirds of 
        adolescents aged 12-19 years from lower-income families have 
        had decay. According to the American Academy of Pediatric 
        Dentistry, children who frequently or excessively consume 
        beverages high in sugar are at increased risk for dental 
        caries. Untreated dental caries can lead to pain, infection, 
        tooth loss, and in severe cases, even death. It can slow normal 
        growth and development by restricting nutritional intake. 
        Children who are missing teeth may have chewing problems that 
        limit their food choices and result in nutritionally inadequate 
        diets.
            (17) Local sugary drink taxes that have been implemented 
        and evaluated in the United States have consistently decreased 
        sales of taxed beverages by a range of 10 to 39 percent. They 
        have also raised millions of dollars for community priorities.
    (b) Purposes.--It is the intent of the Congress, by adopting the 
Sugary Drinks Tax Act (also known as the SWEET Act), to diminish the 
human and economic costs of diabetes, obesity, dental caries, and other 
diet-related health conditions. This Act is intended to discourage 
excessive consumption of sugary drinks by increasing the price of these 
products and by creating a dedicated revenue source for programs and 
research designed to reduce the human and economic costs of diabetes, 
obesity, dental caries, and other diet-related health conditions in 
disproportionately impacted populations.

SEC. 3. EXCISE TAX ON CERTAIN SUGARY DRINKS.

    (a) In General.--Subchapter D of chapter 32 of the Internal Revenue 
Code of 1986 is amended by inserting after part I the following new 
part:

                        ``PART II--SUGARY DRINKS

``Sec. 4171. Imposition of tax.
``Sec. 4172. Definitions.
``Sec. 4173. Special rules.

``SEC. 4171. IMPOSITION OF TAX.

    ``(a) In General.--There is hereby imposed a tax on the sale or 
transfer of any specified sugary drink product by the manufacturer, 
producer, or importer thereof.
    ``(b) Rate of Tax.--The rate of tax imposed under subsection (a) in 
such specified sugary drink products shall be calculated using the 
following tiered system:
            ``(1) For sugary drinks in cans, bottles, plastic or other 
        containers:
                    ``(A) Tier 1: Drinks with fewer than 7.5g of sugars 
                per 12 fluid ounces will not be taxed.
                    ``(B) Tier 2: Drinks with 7.5g to fewer than 30g of 
                sugars per 12 fluid ounces will be taxed at a rate of 
                $0.02 per ounce.
                    ``(C) Tier 3: Drinks with more than 30g of sugars 
                per 12 fluid ounces will be taxed at a rate of $0.03 
                per ounce.
            ``(2) For syrups and powders sold or offered for sale to a 
        retailer for sale to a consumer, either as syrup or powder or 
        as a sugary drink derived from that syrup or powder, are 
        taxable:
                    ``(A) Syrups and powders shall be taxed using the 
                following tiered system:
                            ``(i) Tier 1: If the drink made from the 
                        syrup or powder have fewer than 7.5g of sugars 
                        per 12 fluid ounces, the syrup or powder will 
                        not be taxed.
                            ``(ii) Tier 2: If the drink made from the 
                        syrup or powder have 7.5g to fewer than 30g of 
                        sugars per 12 fluid ounces, the syrup or powder 
                        will be taxed at a rate equal to $0.02 per 
                        ounce of sugary beverage produced from that 
                        syrup or powder.
                            ``(iii) Tier 3: If the drink made from the 
                        syrup or powder have more than 30g of sugars 
                        per 12 fluid ounces, the syrup or powder will 
                        be taxed at a rate equal to $0.03 per ounce of 
                        sugary drink produced from that syrup or 
                        powder.
                    ``(B) For purposes of calculating the tax, the 
                volume of sugary drink produced from syrups or powders 
                shall be the larger of (1) the largest volume resulting 
                from use of the syrups or powders according to any 
                manufacturer's instructions, or (2) the volume actually 
                produced by the retailer, as reasonably determined by 
                the Secretary.
            ``(3) The Nutrition Facts label, as required by the Food 
        and Drug Administration, shall be used to determine the amount 
        of sugars per 12 ounces of sugary drink by referencing the 
        `Serving Size' and `Total Sugars' lines on the label.
    ``(c) Persons Liable for Tax.--The manufacturer, producer, or 
importer referred to in subsection (a) shall be liable for the tax 
imposed by such subsection.
            ``(1) It is suggested that the amount of tax imposed by 
        this section be passed along to consumers. Manufacturers, 
        bottlers, wholesalers, or distributors should add the tax 
        amount to the distribution price of sugary drinks, and 
        retailers should add the tax amount to the retail price of 
        sugary drinks.

``SEC. 4172. DEFINITIONS.

    ``(a) Specified Sugary Drink Product.--For purposes of this part--
            ``(1) In general.--For purposes of this part, the term 
        `specified sugary drink product' means--
                    ``(A) any liquid intended for human consumption 
                which contains a caloric sweetener, and
                    ``(B) any liquid, or solid mixture of ingredients, 
                which--
                            ``(i) contains a caloric sweetener, and
                            ``(ii) is intended for use as an ingredient 
                        in a liquid described in subparagraph (A).
            ``(2) Exceptions.--The following shall not be treated as 
        liquids described in paragraph (1)(A):
                    ``(A) Any liquid the primary ingredients of which 
                are milk or soy, rice, or similar plant-based milk 
                substitute.
                    ``(B) Any liquid composed entirely of one or more 
                of the following:
                            ``(i) The original liquid resulting from 
                        the pressing of fruit or vegetables.
                            ``(ii) The liquid resulting from the 
                        reconstitution of fruit or vegetable juice 
                        concentrate.
                            ``(iii) The liquid resulting from the 
                        restoration of water to dehydrated fruit or 
                        vegetable juice.
                    ``(C) Infant formula.
                    ``(D) Any liquid products manufactured for use as--
                            ``(i) an oral nutritional therapy for 
                        persons who cannot absorb or metabolize dietary 
                        nutrients from food or beverages,
                            ``(ii) a source of necessary nutrition used 
                        due to a medical condition, or
                            ``(iii) an oral electrolyte solution for 
                        infants and children formulated to prevent 
                        dehydration due to illness.
                    ``(E) Any liquid with respect to which tax is 
                imposed under chapter 51 (relating to distilled 
                spirits, wines, and beer) or under section 7652 by 
                reason of the tax imposed under chapter 51 being 
                imposed on like articles of domestic manufacture.
    ``(b) Caloric Sweetener.--For purposes of this part, the term 
`caloric sweetener' means monosaccharides, disaccharides, and high-
fructose corn syrup.

``SEC. 4173. SPECIAL RULES.

    ``(a) Sweetener Taxed Only Once.--In the case of any specified 
sugary drink product which is manufactured or produced by including one 
or more other specified sugary beverage products, no tax shall be 
imposed under this section on any caloric sweetener contained in the 
resulting specified sugary drink product if tax was previously imposed 
under this section on such caloric sweetener when contained in the 
specified sugary drink product so included.
    ``(b) Inflation Adjustment.--The tax amounts set forth in this 
section shall be adjusted annually by the Secretary in proportion with 
the Consumer Price Index: All Urban Consumers for All Items for the 
Statistical Area as reported by the United States Bureau of Labor 
Statistics or any successor to that index. Any increase determined 
under this subsection shall be rounded to the nearest multiple of one-
tenth of a cent.''.
    (b) Conforming Amendments.--
            (1) Section 4221(a) is amended by adding at the end the 
        following: ``Paragraphs (1), (4), (5), and (6) shall not apply 
        to the tax imposed under section 4171.''.
            (2) The table of parts for subchapter D of chapter 32 of 
        such Code is amended by inserting after the item relating to 
        part I the following new item:

                      ``Part II. Sugary Drinks''.

    (c) Revenues Used To Improve Nutrition Quality of the School 
Breakfast Program.--
            (1) Transfer to the school breakfast program.--There are 
        hereby appropriated to the School Breakfast Program created 
        under section 4(b) of the Richard B. Russell National School 
        Lunch Act (42 U.S.C. 1753(b)) (in addition to any other amounts 
        appropriated to such Program) amounts equivalent to the taxes 
        received in the Treasury under part II of subchapter D of 
        chapter 32. Rules similar to the rules of section 9601 of the 
        Internal Revenue Code of 1986 shall apply with respect to the 
        amounts appropriated under this paragraph.
            (2) Performance-based use of funds.--
                    (A) The U.S. Department of Agriculture will 
                promulgate proposed regulations no later than six 
                months upon enactment to update the meal patterns and 
                nutrition standards for the School Breakfast Program 
                established by section 4 of the Child Nutrition Act of 
                1966 (42 U.S.C. 1773) to be in compliance with the 
                quantitative recommendations of the most recent Dietary 
                Guidelines for Americans, including, but not exclusive 
                of, a first ever standard for added sugars.
                    (B) Beginning on the promulgation of the 
                implementing regulations described in subsection 
                (c)(2)(A), the Secretary shall provide an additional 
                10-cent reimbursement for each breakfast served by a 
                school food authority certified by the State to be in 
                compliance with the interim or final regulations 
                described in subsection (c)(2)(A).
            (3) Failure to comply.--Beginning on the date described in 
        subsection (c)(2)(A), school food authorities found to be out 
        of compliance with the meal patterns or nutrition standards 
        established by the implementing regulations shall not receive 
        the additional reimbursement for each breakfast served 
        described in this paragraph.
    (d) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall take effect on the date 
        of the enactment of this Act.
            (2) Excise tax.--The amendments made by subsections (a) and 
        (b) shall apply to sales after the date of the enactment of 
        this Act.
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