Cook County Puts Soda Tax on Ice in December

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By Michael J. Bologna

The Cook County Board of Commissioners took the final step to repeal the sweetened beverage tax, approving an ordinance Oct. 11 that puts the wildly unpopular revenue program on ice after just two months of collections.

By a vote of 15-2, the board of Illinois’ largest county passed an ordinance repealing the penny-per-ounce levy on sales of sweetened beverages. The ordinance eliminates the so-called soda tax beginning Dec. 1, the first day of fiscal year 2018. The vote came one day after the county’s finance committee endorsed the repeal measure.

The Can the Tax Coalition, backed by the American Beverage Association, said municipalities across the country should consider Cook County’s experience if they are flirting with tax programs aimed at the beverage industry.

“What has happened in Cook County and places like Philadelphia should be a warning sign to any community considering a beverage tax to balance its budget,” the coalition said in a statement Oct. 11. “The beverage tax has been a distraction in Cook County at a time when everyone needs to work together and find a better way. Beverage taxes just don’t work and we look forward to December 1st.”

Expected Revenue Shortfall

Collections under Cook County’s soda tax commenced on Aug. 2, quickly kicking up a public backlash. Consumers objected to paying an additional 68 cents for a two-liter soft drink or an extra 72 cents for a six-pack. Groceries, restaurants and convenience stores complained the tax was driving consumers to neighboring jurisdictions to avoid the tax. And law firms filed at least a dozen consumer class actions against retailers and fast food chains that failed to properly calculate the tax on retail sales.

The vote to repeal was a huge disappointment to Cook County Board President Toni Preckwinkle, who defended the revenue program for more than a year. On Oct. 5, Preckwinkle argued the tax was needed to close gaps in her proposed $5.4 billion budget for FY 2018. She also warned any tinkering with the soda tax would force the county to slash spending on health and criminal justice programs by 11 percent.

With the soda tax repealed, Preckwinkle called on commissioners to help her solve an expected $200 million revenue shortfall.

“As I outlined last week, it is up to the commissioners to choose our direction on revenue, and I respect their authority to do so,” Preckwinkle said after the finance committee’s repeal vote.

At least eight other localities have some tax on sweetened drinks. They are Seattle; Philadelphia; Boulder, Colo.; and four cities in California: San Francisco, Oakland, Berkeley, and Albany.

This year, attempts to enact soda taxes in Santa Fe, N.M., and statewide in Massachusetts and West Virginia failed.

Former New York Mayor Michael Bloomberg, a long-time critic of the health effects of sweetened beverages, had joined the Cook County fight as well, investing more than $5 million on political messaging to prop up the tax program. Bloomberg is the founder of the financial data and media company Bloomberg L.P. Bloomberg BNA is an affiliate of Bloomberg L.P.

To contact the reporter on this story: Michael J. Bologna in Chicago at mbologna@bna.com

To contact the editor responsible for this story: Jennifer McLoughlin at jmcloughlin@bna.com

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