AN ACT Relating to excise taxes on carbonated beverages and syrups; amending RCW 82.64.010, 82.64.020, 82.64.030, and 82.64.040; adding new sections to chapter 82.64 RCW; creating new sections; prescribing penalties; providing an effective date; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. RCW 82.64.010 and 1989 c 271 s 505 are each amended to read as follows:

Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Carbonated beverage" has its ordinary meaning and includes any nonalcoholic liquid intended for human consumption which contains carbon dioxide, whether carbonation is obtained by natural or artificial means.

(2) (("Possession" means the control of a carbonated beverage or syrup located within this state and includes both actual and constructive possession. "Actual possession" occurs when the person with control has physical possession. "Constructive possession" occurs when the person with control does not have physical possession. "Control" means the power to sell or use a carbonated beverage or syrup or to authorize the sale or use by another.

~~(3)~~)) "Previously taxed carbonated beverage or syrup" means a carbonated beverage or syrup in respect to which a tax has been paid under this chapter. A "previously taxed carbonated beverage" includes carbonated beverages in respect to which a tax has been paid under this chapter on the carbonated beverage or on the syrup in the carbonated beverage.

((~~(4)~~)) (3) "Syrup" means a concentrated liquid which is added to carbonated water to produce a carbonated beverage.

((~~(5)~~)) (4) Except for terms defined in this section, the definitions in chapters 82.04, 82.08, and 82.12 RCW apply to this chapter.

Sec. 2. RCW 82.64.020 and 1989 c 271 s 506 are each amended to read as follows:

(1) A tax is imposed on ((~~the privilege of possession~~)) each sale at wholesale of a carbonated beverage or syrup in this state. The rate of the tax shall be equal to eighty-four one-thousandths of a cent per ounce for carbonated beverages and seventy-five cents per gallon for syrups. Fractional amounts shall be taxed proportionally.

(2) A tax is imposed on each sale at retail of a carbonated beverage or syrup in this state. The rate of the tax shall be equal to the rate imposed under subsection (1) of this section.

(3) Moneys collected under this chapter shall be deposited in the drug enforcement and education account under RCW 69.50.520.

((~~(3)~~)) (4) Chapter 82.32 RCW applies to the ((~~tax~~)) taxes imposed in this chapter. The tax due dates, reporting periods, and return requirements applicable to chapter 82.04 RCW apply equally to the ((~~tax~~)) taxes imposed in this chapter.

Sec. 3. RCW 82.64.030 and 1989 c 271 s 507 are each amended to read as follows:

The following are exempt from the ((~~tax~~)) taxes imposed in this chapter:

(1) Any successive ((~~possession~~)) sale of a previously taxed carbonated beverage or syrup. ((If tax due under this chapter has not been paid with respect to a carbonated beverage or syrup, the department may collect the tax from any person who has had possession of the carbonated beverage or syrup. If the tax is paid by any person other than the first person having taxable possession of a carbonated beverage or syrup, the amount of tax paid constitutes a debt owed by the first person having taxable possession to the person who paid the tax.))

(2) Any carbonated beverage or syrup that is transferred to a point outside the state for use outside the state. The department shall provide by rule appropriate procedures and exemption certificates for the administration of this exemption.

(3) ((~~Any possession of a carbonated beverage or syrup where the first possession occurred before July 1, 1989~~)) Any sale of trademarked carbonated beverage or syrup by any person to a person who is licensed by the owner of the trademark to manufacture, distribute, or sell such trademarked carbonated beverage or syrup.

(4) Any sale of carbonated beverage or syrup in respect to which a tax on the privilege of possession was paid under this chapter before the effective date of this act.

NEW SECTION. Sec. 4. A new section is added to chapter 82.64 RCW to read as follows:

(1) The tax imposed in RCW 82.64.020(1) shall be paid by the buyer to the wholesaler and each wholesaler shall collect from the buyer the full amount of the tax payable in respect to each taxable sale, unless the wholesaler is prohibited from collecting the tax from the buyer under the Constitution of this state or the Constitution or laws of the United States. Regardless of the obligation to collect the tax from the buyer, the wholesaler is liable to the state for the amount of the tax. The buyer is not obligated to pay or report the tax imposed in RCW 82.64.020(1) to the department.

(2) The tax required to be collected by the wholesaler shall be stated separately from the selling price in any sales invoice or other instrument of sale.

(3) Any wholesaler who fails or refuses to collect tax under this section, with intent to violate the provisions of this chapter or to gain some advantage or benefit, either direct or indirect, is guilty of a misdemeanor.

(4) The amount of tax required to be collected under this section shall constitute a debt from the buyer to the wholesaler until paid by the buyer to the wholesaler.

NEW SECTION. Sec. 5. A new section is added to chapter 82.64 RCW to read as follows:

(1) Each retailer at a retail store with a sales and storage area totaling more than four thousand square feet may:

(a) Include in all print advertising of carbonated beverages a notice with the statement specified in subsection (2) of this section.

(b) Post shelf notices with the statement specified in subsection (2) of this section. Shelf notices shall be provided by the wholesaler, and shall be posted by the wholesaler or the retailer next to each price label on the carbonated beverage shelves of the retail store.

(2) Each notice under this section shall state: "Price includes (amount) Washington Drug Fund Tax." In the notice, "(amount)" shall be replaced with the specific amount of the tax imposed under this chapter upon the quantity of carbonated beverage for which the price is stated.

(3) This section does not apply to the sale, advertising, or shelf display of:

(a) Syrups;

(b) Carbonated beverages sold through vending machines;

(d) Carbonated beverages sold by a wholesaler who is prohibited under RCW 66.28.010 from having a direct or indirect financial interest in any retail business.

NEW SECTION. Sec. 6. The taxes imposed in this act are intended to raise revenue for the enforcement of the drug laws of the state. It is the policy of the state to actively combat the problem of drug abuse by aggressive enforcement of the state's drug laws and by extensive promotion of public education programs designed to increase public and consumer awareness of the state's drug problem and its enforcement measures. Pursuant to this policy, the retailers and wholesalers subject to the provisions of this chapter are authorized and encouraged to agree on procedures for posting notices under section 5 of this act.

Sec. 7. RCW 82.64.040 and 1989 c 271 s 508 are each amended to read as follows:

(1) Credit shall be allowed, in accordance with rules of the department, against the taxes imposed in this chapter for any carbonated beverage or syrup tax paid to another state with respect to the same carbonated beverage or syrup. The amount of the credit shall not exceed the tax liability arising under this chapter with respect to that carbonated beverage or syrup.

(2) For the purpose of this section:

(a) "Carbonated beverage or syrup tax" means a tax:

(i) That is imposed on the ((~~act or privilege of possessing~~)) sale at wholesale of carbonated beverages or syrup and that is not generally imposed on other activities or privileges; and

(ii) That is measured by the volume of the carbonated beverage or syrup.

(b) "State" means (i) a state of the United States other than Washington, or any political subdivision of such other state, (ii) the District of Columbia, and (iii) any foreign country or political subdivision thereof.

NEW SECTION. Sec. 8. The amendatory sections of this act shall not be construed as affecting any existing right acquired or liability or obligation incurred under those sections as they existed before this act or under any rule or order adopted under those sections, nor as affecting any proceeding instituted under those sections.

NEW SECTION. Sec. 9. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect June 1, 1991.