One of the major sticking points for the Yes on 1107 camp is calling the soda, bottled water and candy tax passed by the legislature, a tax on “food.” The coalition is doing so based on the definition the state of Washington uses to decide what is and what is not candy.
Candy is a preparation of sugar, honey, or other natural or artificial sweeteners combined with chocolate, fruits, nuts, or other ingredients or flavorings in the form of bars, drops, or pieces. Candy does not require refrigeration, and does not include flour as an ingredient.
Why is flour included as a defining characteristic of candy? According to the Department of Revenue, the definition was developed in conjunction with more than 20 other states as part of the Streamlined Sales and Use Tax Agreement.
Thus this is a definition that crosses state borders. The rationale is to “exclude products… that are typically not considered candy” like cookies and other baked goods. Why is flour the determining factor? An examination of the SSUTA work group notes on the matter shows that including flour in the definition was intended to separate candy from cookies.
The Streamlined Sales Tax Governing Board has addressed the issue of using this definition as certain candies are exempt while many protein bars are not. The issue is apparent in their notes from an August 2010 draft:
In adopting this definition in 2002, states realized that certain products such as Kit Kat®, Twix®, Reese Sticks®, and some licorice would no longer be candy under the SSUTA definition because these products ingredient labels contained a specific listing for flour. In addition, states were aware that granola bars, Slim-Fast® Bars and similar breakfast bars and nutrition bars would be considered candy when the product ingredient labeling did not contain a specific listing for flour because they are sold in the form of bars and do not require refrigeration.
In early September, the group was seeking input on the definition of candy. And are now recommending adding a clause on:
Recommendation: Consider adding the following clause to the exemption statement: “shall notinclude any preparation containing 5g or more protein per serving.”