The Chicago Soda Tax Attempt

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While various soda tax battles were being waged in California, Colorado, and other states, Illinois entered the fray with a saga worthy of a TV mini-series. Cook County, which is mainly Chicago, proposed a one-cent-per-ounce tax that would pull in $560 million per year.

A burning question was whether Cook County’s hundreds of thousands of SNAP (“food stamp”) recipients would have to pay. Eventually, a court action quashed that notion. But it was one of the sore points that alienated large segments of the public, because of the uncertainty about a detail that should have been made clear from the start.

Presumably, the public servants who wanted the tax would have studied how it was done in other places, so they might anticipate the stumbling blocks in the process. The taxing of soft drinks is supposed to have a deterrent effect, so consumers will buy less soda, and thus avoid obesity.

But since the SNAP question was brought up, it alerted the public to the fact that the tax would not be collected from SNAP recipients. This supplied plenty of opportunity for critics to point out that the poor are the most at-risk for obesity, so what’s the point of taxing everybody else except them?

For the Chicago Tribune, Greg Trotter wrote:

The study estimated the tax would prevent 116,000 cases of obesity and cause a $733 million decrease in health care costs over a 10-year period. The study, part of the broader, ongoing Childhood Obesity Intervention Cost-Effectiveness Study (CHOICES) at Harvard, models the impact of the tax in Illinois.

Illinois said yes to the soda tax, but the Illinois Retail Merchants Association (IRMA) petitioned the court for a temporary restraining order, on grounds of unconstitutionality and vagueness, which is a vague way of saying that the tax would hurt beverage sales. The judge who was scheduled to hear the case recused himself for some reason, perhaps unwilling to deal with one of IRMA’s objections, the thorny issue of uneven application of the law. The problem was:

Retailers also have noted they must either charge customers tax on the ice in fountain drinks, unless they fill out paperwork to designate how much ice each cup holds. Complicating matters, most fast food restaurants that serve fountain drinks allow customers to decide how much ice to put in their drinks.

A different judge took the case, upheld the ordinance, and removed the temporary restraining order. Beneath a headline that called the soda tax “insane,” journalist Jack Burns described this latest outrage perpetrated against the sugar-sweetened beverage corporations. Cook County, upset at the delay in revenue collection, sued IRMA for the millions that the restraining order had prevented the government from making in the interim.

There was some support for IRMA on grounds of general principle, that principle being that there is a “chilling effect” on parties who want to sue the government, when they know that losing might cost them money. The reporter referenced a citizen who bought a 24-can pack of 12-ounce sodas and compared the “before” price ($5.99) with the “after” price ($9.66), with the after price including $2.88 for the soda tax, and the customary 10.25 percent sales tax added in there too.

It is interesting that retail websites currently offer that same pack of 24 sodas for $13, $14, and even $20. The Chicago purchase given as a horrible example was only last year, so what’s up with that stunning price differential? It is also interesting that the quoted citizen’s Facebook timeline is full of heart-warming photos of him with various grandkids — the very demographic that the soda tax hopes to protect from a life of obesity.

(To be continued…)

Your responses and feedback are welcome!

Source: “Illinois soda tax could cut health costs, raise $561 million in revenue annually,” ChicagoTribune.com, 04/25/17
Source: “Hearing on Cook County Sugary Beverage Tax Delayed,” CBSLocal.com, 06/28/17
Source: “Chicago’s Insane Soda Tax Shows What Happens When Crooked Govts Collapse — They Rob the People,” DCClothesLine.com, 08/08/17
Photo by Miran Rijavec (Artist of doing nothing) on Visualhunt/CC BY

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