KBI Position Paper – Municipal Sugar Tax & Kombucha

Municipalities are eager to find new ways to fund their operations and programs. Lately it has been popular to enact a “sugar tax” on non-alcoholic beverages that exceed whatever threshold the municipality has deemed as acceptable. There is a long history of enacting “sin taxes” on products that are perceived or proven to have a negative impact on the health of consumers in an attempt to limit their behavior.

Kombucha is a traditional fermented beverage made from tea and sugar. During the fermentation process, most of the sugars are consumed by the microorganisms present in the SCOBY (Symbiotic Culture of Bacteria and Yeast) and converted into trace amounts of ethanol and organic acids. Each producer has their own fermentation process and method as well as their own flavor profile – some of which may skew sweeter in order to attract a certain type of consumer.

However, despite having some sugar present, the fermentation process materially changes the structure of the sugars – the disaccharide sucrose (table sugar) is broken into its monosaccharide components thus creating a lower glycemic impact. Also, the living organisms and nutrition in a living form (trace amounts of B vitamins, vitamin C, amino acids, etc) contribute a net positive effect to the consumer unlike comparable non-alcoholic beverages – i.e. sodas, energy drinks, juices, etc.

Moreover, many of these statutes include exemptions for products such as diet soda which, while their sugar content may be low, do contain known carcinogens. The unintended consequence is that products that are healthier end up taxed while less healthy options cost less and could influence consumer behavior in a negative way.

While KBI has been active in supporting its members who are dealing with these local statutes, ultimately, the decision whether or not to tax Kombucha falls to the cities themselves. Any taxes required are charged at the discretion of those locales and are not in any way under the purview of the Kombucha producer.

REFERENCES

1. Jayabalan, Rasu, et al. “A review on kombucha tea—microbiology, composition, fermentation, beneficial effects, toxicity, and tea fungus.” Comprehensive Reviews in Food Science and Food Safety 13.4 (2014): 538-550.

Rev.090617 Adopted by KBI Board Oct 2017