Cook County’s sweetened drink tax still hasn’t taken effect
An Illinois appeals court upheld a temporary restraining order on Cook County’s proposed sweetened beverage tax. Cook County officials claim 1,100 jobs will be lost if the tax does not go into effect.
An Illinois appellate court upheld a temporary restraining order issued in June against a penny-per-ounce soda tax, according to the Chicago Tribune. On June 30, a Cook County Circuit Court judge issued the temporary restraining order to halt the implementation of the tax.
The soda tax, approved by the Cook County Board in November 2016, was scheduled to go into effect July 1. However, a last-minute lawsuit filed by the Illinois Retail Merchants Association and several grocers claimed that the tax was unconstitutionally vague and not uniform in what it taxes.
The tax would apply to sweetened beverages – such as soda, tea, energy drinks, juice drinks and more – sold in Cook County, including in Chicago. Chicago already has a 10.25 percent combined sales tax and a 3 percent beverage tax, and together these taxes could make soda costs in the city among the highest in the nation. The Cook County tax would add $1.44 to the cost of a $4 12-pack of soda in Chicago, and along with the sales tax and Chicago beverage tax, would raise the total cost of the 12-pack to $5.97.
County Board President Toni Preckwinkle claimed the delay in the implementation of the new tax will cost 1,100 Cook County government jobs. The county handed out about 300 layoff notices to employees July 14, according to the Chicago Sun-Times.
The county was counting on raising $67.5 million through Nov. 30 with the soda tax and more than $200 million during fiscal year 2018.
The restraining order has been extended to July 21, when a hearing on the case is scheduled to take place, according to the Chicago Tribune.
The tax’s uncertain application has confused many retailers, grocers and consumers.
One issue, the Daily Herald reported June 29, is ice displacement in a cup. The tax is applied per ounce, but since ice takes up space within a cup, the amount of soda might not exactly match the amount of ounces the cup is supposed to hold. The county hasn’t provided a clear answer on how to navigate that, either. A spokesman for Cook County Board President Toni Preckwinkle told the Daily Herald, “How [restaurants] fill up the cup is an issue between them and their customers.” The same question would apply to free refills offered by restaurants.
But if restaurant owners wanted to eat the cost of the tax themselves instead of passing it on to consumers, they don’t have the option. The law specifically states: “The tax must be passed on to the consumer.” Consumers won’t be able to skirt the tax by ordering soda online, either, as any soda shipped into Cook County is subject to the tax, according to NBC 5 Chicago. The tax also includes any syrups or powders restaurants purchase to make soda, which are taxed by the amount of ounces of sugary drinks the syrups or powders will make.
The vague and confusing nature of the tax may be a headache for retailers, but what is clear is that the tax will hit consumers’ pocketbooks, in a county that already has imposed numerous tax hikes on its residents in just the past two years. Cook County residents shouldn’t have to bail out politicians’ financial recklessness. The penny-per-ounce sugary drinks tax is a way to do just that, and the tax’s ambiguity creates a hassle for businesses that only aggravates the injury.