Drinks that list milk as their primary ingredient are excluded from the tax. That should include sugary, flavored lattes, like those sold at Starbucks.
Where and when is a sweetened beverage not a taxable sweetened beverage?
In Seattle, when the drink is a Caramel Macchiato from Starbucks — 42 grams of sugar in a Venti, the largest size. Or a Caramel Brulée Latte with whipped cream — 68 grams of sugar in a Venti.
The city’s new tax on the distribution of sweetened beverages, syrups and concentrates, which starts Monday, excludes drinks that list milk as their first ingredient.
That rules out taxes for chocolate milk and eggnog, obviously. But some coffee-shop drinks also will be spared, said Mark Watterson of Seattle’s Finance and Administrative Services Department, which drew up rules for the tax. Flavored lattes at Starbucks list milk as their primary ingredient.
The picture was less clear earlier this year, when the City Council was considering the tax proposed by then-Mayor Ed Murray.
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Murray’s initial plan excluded “in-store prepared coffee beverages” from the tax. Then he changed his tack, asking the council to exempt milk drinks instead.
The mayor’s office insisted beverage syrups used by coffee shops would be taxed at the point of distribution — 1.75 cents for each ounce of beverage the syrups end up being part of.
But the office said some exceptions would be determined later, during the rule-making process.
That process is now complete, and here’s what the rules say.
A distributor will owe the tax on every bottle of syrup sold to a coffee shop. But if the shop uses some of the bottles to make milk-based drinks and gives the distributor a signed statement saying so, the city will give the distributor a break on the tax for those bottles, Watterson said.
And what about those sugar-high-inducing blended beverages, like the flavored Frappuccino drinks that Starbucks sells?
Like lattes, Frappuccino drinks include milk. But their first ingredient is ice, so the tax should apply. Watterson didn’t want to comment on specific products, but he confirmed that ice counts as an ingredient.
Starbucks, which spent $7,500 lobbying Seattle officials in the second and third quarters of 2017, doesn’t like the tax and urged its customers to contact the City Council after the measure passed in June.
“We are concerned about the harmful economic impact this measure will have on the hundreds of Seattle’s coffee shops, beyond just Starbucks, and their customers,” spokesman Reggie Borges said in an email last week.