Chicago soda tax called one of most draining on consumers
You'll need to dig deep to pop for a soda in the Chicago area, according to the Better Government Association (BGA), which says the new Cook County beverage tax has made it one of the most expensive places in the United States for soft drinks.
“As soft drink consumers and sellers came to grips with the new charges, the libertarian Illinois Policy Institute – never a fan of any tax, and a particularly harsh critic of the tax habits of Cook County and Chicago – framed the drink tax in a consumer unfriendly light,” the BGA's Matt Dietrich wrote, referring to an article claiming that sodas in Chicago are now among the most expensive in the country. “That is a little like proclaiming the sun rises in the east, but given intense public interest in the soda tax we thought it was a worth a look anyway."
The Cook County Board approved a one cent-per-ounce tax on sweetened drinks, whether using sugar or non-caloric sweeteners. According to the Illinois Policy Institute’s original report by marketing intern John Kristof, the tax applies to canned and bottled sodas as well as “fountain drinks, energy drinks, ready-to-drink tea and coffee products, diet soda and juices that aren’t 100 percent fruit or vegetable juice.” The BGA noted that the tax applies to "free" refills, which will now cost 1 cent per ounce.
The tax went into effect on Aug. 2, following a legal battle with the Illinois Retail Merchants Association (IRMA), which filed a lawsuit arguing that the tax is unconstitutional. According to the institute, the new tax is on top of Chicago’s 10.25 percent sales tax, which combines state and local rates, and an existing 3 percent soft drink sales tax. That puts the price of a 2-liter bottle of soda at $3.49, a $1 increase of its base price. The sales tax adds 26 cents, the city soft drink tax to 7 cents and the new county beverage tax to 67 cents.
Similarly, Dietrich notes, a 12 pack of 12-ounce cans jumps from a $4 base price to a $5.97.
“[E]ven among the eight places in the nation taxing or preparing to tax consumers by the ounce for sweetened soft drinks, Cook County’s measure reaches an especially broad swath of consumers,” Dietrich wrote.
Cook County is the largest jurisdiction to put a sugary beverage tax in place, and one of three jurisdictions, with Philadelphia and Seattle, where the tax was approved by elected officials. The California towns of Albany, Berkeley, Oakland and San Francisco approved their taxes with a voter referendum, as did Boulder, Colorado, though the BGA points out that there is no mechanism for a county referendum on such an issue in Illinois.
Cook County’s 1 cent per ounce tax is below other large-city taxes. Boulder adds 2 cents per ounce, Seattle 1.75 cents and Philadelphia 1.5 cents. However, besides Chicago, only Philadelphia also applies its tax to beverages sweetened with non-caloric sweeteners. The county ordinance says the wider application of the tax is based on studies that link diet drinks to obesity concerns.
Dietrich argued that all things considered, Chicago puts one of the heaviest onuses on soda drinkers.
“With Chicago already charging the nation’s highest sales tax of any major city plus a 3-percent soft drink tax, it’s almost certain that consumers in the city paid 'among' the highest prices for soft drinks in the country even before the Aug. 2 arrival of the sweetened drink tax,” Dietrich wrote. “But Chicago truly moved into a select group when its home county joined the seven other cities that have enacted or are poised to enact by-the-ounce taxes on sweetened soft drinks.”
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