Will Cook County soda tax make you pay for the ice in your drink?
Soda and other sweetened drinks bought in Cook County are set to cost you significantly more starting Saturday.
But will the amount of ice affect the price?
And will your refill still be free?
Those are among the many nuances of the new penny-per-ounce "soda tax" facing retailers and restaurant owners.
"How they fill up the cup is an issue between them and their customers," said Frank Shuftan, a spokesman for Cook County Board President Toni Preckwinkle.
That's going to lead to some customers being taxed more than others or restaurants not being able to fully comply with the law, critics of the tax say.
Take McDonald's, for instance. Diners can buy a soda in a 32-ounce cup for $1. But once ice is dumped in, the cup won't hold 32 ounces of soda.
The law states restaurants can charge less to make up for ice displacement if "the business uses cups with an ice fill line" and "submit that information" to the county revenue department "as proof of the number of ounces sold."
But most McDonald's locations allow customers to decide the amount of ice. The fast-food chain also allows free refills to in-store customers, which would mean drive-through customers could be taxed at a higher rate than those who dine in and consume multiple untaxed glasses of soda. Attempts to reach McDonald's officials for an explanation of how they plan to implement the tax were unsuccessful.
Shuftan said McDonald's officials have submitted details regarding ice displacement in their cups to the county.
Restaurant owners can charge the tax on the full volume of the cup if they choose. That means a 32-ounce soda at an Arlington Heights McDonald's would go from $1.11 -- after state, local and RTA sales taxes and a 1.25 percent municipal food and beverage tax -- to as much as $1.43 beginning Saturday.
A group of retailers cited vagueness in the law when it filed suit Tuesday to try halt the tax, which also applies to bottled sweetened beverages sold by retailers. A 2-liter bottle of soda, for instance, will cost 67 cents more.
Some restaurants in the suburbs are posting signs warning customers of the pending tax, but those signs don't indicate the effect the tax will have on beverage orders.
"We're just going to have to eat it ourselves," said Derek Hanley, owner of Peggy Kinnane's Irish Restaurant & Pub in downtown Arlington Heights. "I can't price that out to the consumer."
But he's going to have to. According to one of the 78 "Frequently Asked Questions" about the law on the county's website, "the tax must be passed on to the consumer."
Hanley also thought he was being taxed on the ounces of syrup he purchases to make sodas at the restaurant. But in fact, he's being taxed on the ounces of soda the syrup makes.
So a 5-gallon bag of soda syrup will cost Hanley an extra $38.40 after Saturday, not just the $6.40 he thought. And since he goes through about six bags a week, that's an extra $230 a week in taxes he's paying his distributor, or nearly an extra $1,000 a month.
"Wow! That's huge," Hanley said when informed of the true cost. "That's an extra $12,000 a year."
Some of that beverage goes down the drain when people overfill their drink cups. Is there a tax on what's spilled?
There is a 5 percent "spillage and product preparation" rebate on soda syrup, so that would lower Hanley's costs by about $2 a bag.
Even though consumers are ultimately supposed to pay the tax, it's the distributors of the sweetened beverages who are responsible for paying the county.
"We're advising our members to comply as best they can," said Brian Jordan, president of the Illinois Food Retailers Association. "But this tax is a terrible regression tax that will drive business out of Cook County."
Cook County's tax is one of the broadest of its type in the nation.
Chicago already has a soda tax, but it only applies to bottled drinks. Philadelphia; Seattle; Boulder, Colorado; and several cities in the Bay Area of northern California also have sweetened beverage taxes.
Philadelphia's tax, which began in January, is most similar to Cook County's. So far, according to media reports, revenues from the tax are off significantly. Philadelphia expected to raise $46 million in six months, but so far it has raised only $32.3 million from the tax after five months of returns and is not on pace to meet revenue projections.
"Cook County should heed the warning signs from Philadelphia, where the beverage tax has resulted in declining sales, consumer flight, lost jobs and a gaping hole in the city's budget because Philadelphia politicians inflated the tax's revenue projections," said David Goldenberg, a spokesman for the Can the Tax Coalition, a lobbying group fighting the implementation of the tax.
When announced less than a year ago, the tax was promoted by Preckwinkle as a way to help close a budget gap and slow the growth in obesity rates. It was estimated to bring in more than $220 million annually to the county, but that was before a recent change that made the tax not apply to people in the Supplemental Nutrition Assistance Program, or SNAP. New revenue estimates have not been released.
Proponents of the tax say it will make sugary drinks less desirable -- and affordable -- which in turn will help with obesity and diabetes rates of county residents.
Elissa Bassler, CEO of the Illinois Public Health Institute, said researchers have estimated a reduction of 37,000 cases of obesity and 7 percent reduction in diabetes over the next decade.
"This is a healthy source of revenue," Bassler said. "People can choose to pay it or not."
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