Chicago employers say ‘fat tax’ would punch them in the gut

Chicago employers say ‘fat tax’ would punch them in the gut

City leaders are focused on the wrong kind of belt tightening.

The Illinois Restaurant Association and the Illinois Hispanic Chamber of Commerce have taken aim at a proposed penny-an-ounce sales tax on soft drinks sold in Chicago, according to the Chicago Sun-Times.

“Chicago restaurants and small businesses, like consumers, are once again starting to thrive after experiencing one of the worst economic downturns in our nation’s history,” Illinois Restaurant Association CEO Sam Toia was quoted as saying in a press release.

“The last thing we need is to implement discriminatory policies that will slow growth, drive business out of the city and force businesses to raise prices where it hurts the most: in Chicago families’ wallets.”

The new soda tax, proposed by 12th Ward Alderman George Cardenas, would be the third city-level tax imposed on the sale of soft drinks, and would hike the cost of a $4 12-pack of Coca-Cola to $5.44 – a $1.44, 36-percent increase. Chicago already levies a 9-percent tax on fountain drinks and a 3-percent soft-drink tax on cans and bottles. Revenue from the proposed tax wouldn’t go to the city’s general operating fund – it would flow to a newly established “Chicago Wellness Fund,” the primary purpose of which is to “support the prevention of obesity, diabetes, cardiovascular disease, and cancer, as well as oral health improvement.”

Cardenas’ tax would apply to syrups, powders, and canned and bottled soft drinks. He estimates it would generate $134 million a year. “The money spent fighting obesity is just ungodly,” Cardenas told the Sun-Times in July. “We could save billions of dollars if we bring down these numbers.”

That may be true, but one of the many problems with Cardenas’ proposed sugary-drink tax is that such a tax has never been proven to cause a decrease in obesity. Sugary-drink taxes have proved, however, to disproportionately affect the poor and less educated.

Minority business owners can also expect to take a hit, according to Illinois Hispanic Chamber of Commerce CEO Omer Duque.

“The regressive beverage tax being proposed by the Chicago City Council will hit many of these minority-owned businesses and their hard-working employees right where it hurts: their bottom lines,” said Duque in a press release.

“My members already face enough headwinds while striving to build and maintain successful businesses and meet payroll for their employees. The last thing they need is the government piling on with another job-killing tax.”

Tone-deaf tax increases like the soda tax are one of the reasons why Cook County is facing a serious taxpayer-exodus problem. If Chicago is to avoid bankruptcy, city leaders need to spend less time pushing tax schemes aimed at fighting obesity and more time thinking of ways to trim bloated city spending.

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