Judge halts Cook County's 'soda tax'
A Cook County judge on Friday blocked the implementation of Cook County's controversial penny-per-ounce tax on sweetened drinks that was set to start Saturday.
County officials have projected the tax would raise about $200 million over the next 12 months.
The injunction lasts at least through July 12, when the next hearing is scheduled.
Judge Daniel Kubasiak surprisingly sided with the Illinois Retail Merchants Association and several grocers, who sought the restraining order only three days ago. The retailers and lobbying group are seeking a permanent injunction, while the county has filed a motion to dismiss that suit.
At the heart of the injunction was concern over the lack of a refund policy if the tax were found to be unconstitutional.
In his ruling, Kubasiak wrote "the court is fully aware of the importance of the tax to defendant's budget. However, the court believes it is necessary to maintain the status quo in order to protect the interests of all consumers, all taxpayers and the effected merchants."
Additionally, Kubasiak said, "a fair question exists as to the constitutionality of the 'Sweetened Beverage Tax.'"
The tax was approved by the county board late last year as a way of shoring up a budget shortfall. Cook County Board President Toni Preckwinkle also pushed the measure for its health benefits, claiming it ultimately would reduce obesity and diabetes rates among county residents. Preckwinkle said she will have her legal staff file an appeal of the temporary restraining order with the appellate court.
"Revenue from the tax is critical to both balancing our (current) budget and development of our (next) budget," Preckwinkle stated in a news release. "Because we are now more than halfway into our fiscal year, we must immediately look at holdbacks, efficiencies and ... a substantial number of position reductions each month that collection of the tax is delayed."
Supporters of the tax said they believe it eventually will be enacted.
"While we are disappointed about this temporary setback, we are confident that the sweetened beverage tax will soon be implemented and our communities will experience the health benefits that come from drinking less sugar. This optional tax will benefit Cook County's fiscal health and our communities' physical health," Illinois Alliance to Prevent Obesity spokeswoman Monica Lawton wrote in a news release.
The tax would add 67 cents to a 2-liter bottle of soda. It would be up to restaurants and retailers how to charge customers for fountain drinks.
While the county's law would require the cost of the tax to be passed onto consumers, distributors of the sweetened drinks would be responsible for paying the county. Retailers would be charged a tax on how much drink that soda syrup will ultimately make. That means because a 640-ounce bag of syrup - five gallons - makes 3,840 ounces of soda when mixed with carbonated water, retailers would be charged $38.40 more in taxes for that bag of syrup.
Residents who receive federal financial assistance wouldn't have to pay the tax.
The tax would cover any "nonalcoholic beverage, carbonated or noncarbonated, which is intended for human consumption and contains any caloric sweetener or noncaloric sweetener, and is available for sale in a bottle or produced for sale through the use of syrup and/or powder," according to the county's website. Critics complained that it would cut into the county's sales tax receipts, as well as municipal and state sales taxes, because consumers would buy soda in other counties.
Among the many types of drinks not taxed are non-bottled coffees and teas; milk and milk-based products; 100 percent fruit and vegetable juices; drinks sold for nutritional or medical purposes; and baby formula. Critics took umbrage with the fact that drinks like made-to-order coffees weren't being taxed like other drinks, which they argued was counter to a state constitutional provision that requires alike products to be taxed similarly.