Debate over Cook County soda tax is not uncommon in U.S.

Jul 12, 2017


An ongoing legal battle continues to plague Cook County’s proposed Sweetened Beverage Tax, which was originally set to take effect on July 1st. On Monday, the 1st District Appellate Court upheld a temporary restraining order on the tax. The restraining order resulted from a suit filed by the Illinois Retail Merchants Association against the Cook County Board of Revenue, arguing that the tax is vague and unconstitutional. Another hearing is scheduled for July 21st on a preliminary injunction against the soda tax, which would prevent it from taking effect until the court can hear the case completely.

Cook is the only major county in the U.S. to seriously pursue a soda tax, though several municipalities across the U.S. have soda taxes in place already. These taxes are often highly controversial, and ballot measures concerning soda taxes draw in millions of dollars from both supporters and opponents across the country.

soda tax

photo from the Chicago Tribune

The Fierce Fight Over Soda Taxes
The nation’s first soda tax took effect in Berkeley, California in January of 2015. Voters in Berkeley passed the tax as a binding ballot measure in the 2014 General Election. In the past two years, soda taxes have been adopted in Philadelphia, Oakland (CA), Albany (CA), Seattle, and Boulder. San Francisco also passed a soda tax in November of 2016, which takes effect in 2018.

Cook County is the largest governmental body in the US to have passed a soda tax. Other soda taxes in U.S. cities were approved either by city councils or a binding voter ballot initiative. As these taxes are being considered, groups both supporting and opposing the taxes are spending millions of dollars trying to sway the opinion of the general public. Groups representing sweetened beverage producers and retailers generally make up the side opposing soda taxes, while public health groups, often backed by former New York Mayor Michael Bloomberg, tend to support the taxes.

For example, the American Beverage Association reportedly spent over $5 million in Philadelphia in opposition to the city council’s soda tax proposal, while Michael Bloomberg provided at least $1.6 million to the group “Philadelphians for a Fair Future” in pro-soda tax funds. Bloomberg is also reported to have spent at least $18 million in support of soda tax ballot initiatives in San Francisco and Oakland.

In Cook County, Bloomberg reportedly spent $1 million to promote the soda tax. The Cook County Board ended up passing the tax in November of 2016, after the American Beverage Association spent at least $600,000 trying to combat the tax before its passage. The American Beverage Association is still working to combat the tax through a group named the “Can the Tax Coalition.”


Advertisements for and against soda taxes (as shown above)
are abundant across the country

The “Soda Tax” – Who Pays, How Much, and For What?
In Cook County, the Sweetened Beverage Tax applies a once cent per fluid ounce tax to sweetened beverages. According to the ordinance, “sweetened beverages” include “soda, sports drinks, flavored water, energy drinks, pre-made sweetened coffee and tea with less than 50% milk content, etc.” The tax costs consumers an additional $1.44 per 12-pack of soda cans.

On their website, Cook County specifically instructs sweetened beverage distributors and retailers to pass on the tax to consumers. In reality, the tax is collected by distributors when they sell it to retailers, and retailers are meant to add it to the price of the drinks.

The levy of one cent per ounce proposed on Cook County is in line with taxes in several U.S. cities, including San Francisco, Oakland (CA), Albany (CA), and Berkeley (CA). These cities have the lowest soda tax level nationally. Other cities, like Philadelphia and Seattle, tax sodas at 1.5 and 1.75 cents per ounce. Boulder, Colorado has the highest soda tax at 2 cents per ounce.

Projected Soda Tax Revenue
Proponents promote soda taxes based on two potential benefits: improved public health and increased government revenue. Cook County Board President Toni Preckwinkle defended the tax as a revenue enhancement that was projected to bring in $224 million per year as a budget-balancing measure. Members of the public also defended the tax, on the grounds that it could curb obesity, tooth decay, diabetes, and heart disease. The tax would join a 3% tax in Chicago on retail sales of canned and bottled soft drinks, and a 9% tax on wholesale fountain drink syrup.

The soda tax in Berkeley, California raised $1.5 million for the city in its first year. A study on the effects of the tax also indicated that while sales of sugary drinks have declined by almost 10%, sales of healthier drinks have increased, preventing a net decrease in beverage sales.

In Philadelphia, the soda tax was originally projected to raise $92 million in annual revenue. However, Philadelphia’s soda tax has been under fire since it took effect at the beginning of the year. One major beverage distributor claims sales have decreased by 45% due to the tax. Additionally, the city estimated the tax would raise $46 million by June 30th of this year, but revenue is expected to fall significantly short of that goal.

Philadelphia’s soda tax has also undergone considerable court challenges, though a recent Commonwealth Court decision held up the soda tax last month. Opponents of Philadelphia’s tax have said they plan to take the fight to the state’s Supreme Court.

Given the ongoing legal challenge, the future for Cook County’s soda tax is still unclear. The restraining order against the tax could derail the effort before it raises a cent for the county. Regardless of the outcome, soda taxes will continue to be a hotly debated issue throughout Chicago, Cook County, and other major US cities and counties.

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