CHICAGO (CN) – Illinois retailers sued Cook County on Tuesday in a last-ditch effort to block a hefty new tax on soda effective next month that will hike the price of sugary drinks by 50 percent.
Beginning July 1, Cook County’s new tax on sugary drinks will make a pack of Coke bought there one of the most expensive in the nation.
A 12-pack of soda that costs $4 in Chicago today will cost $5.97 just two days hence, a 50 percent price hike.
The new tax will be added on top of Chicago’s 10.25 percent sales tax, already one of the highest in the nation, and a 3 percent tax on non-alcoholic beverages. It is expected to bring in an additional $224 million a year.
The tax will impact not just soda-pop, but also energy drinks, bottled tea and coffee drinks, diet soda, and juice that is not 100 percent fruit or vegetable juice.
It will not, however, apply to sugary drinks made fresh in coffee shops or restaurants.
For example, a bottled Starbucks Frappuccino drink sold in a grocery store will be subject to the tax, but a Frappuccino sold at a Starbucks store will not be.
The Illinois Retail Merchants Association, joined by a number of Chicago-area grocery stores, focused on this disparity in its lawsuit against Cook County filed Tuesday seeking a temporary restraining order against the new tax.
“The Sweetened Beverage Tax creates classifications of sweetened beverages that are not based on any real or substantial differences,” the complaint states.
Cook County officials have defended the tax as not only a measure to raise money for the cash-strapped municipality, but as a way to improve public health, given the strong correlation between sugar consumption and diseases like diabetes and obesity.
But, “the classifications bear no reasonable relationship to the purpose of the Sweetened Beverage Tax, which is expressly to promote public health and reduce obesity rates, because the health consequences of identical beverages in separate classifications is the same,” the retailers allege.
According to a Gallup poll, the tax is likely to hit people with low incomes the hardest, as people with an income of less than $30,000 are far more likely to regularly drink soda than those in a higher income bracket.
Further, the grocery stores claim that they will be unable to correctly charge the tax to people purchasing sugary drinks with food stamps because the federal program prohibits local sales taxes to be collected on purchases of food made with food-assistance benefits.
A spokesman for Cook County Board President Toni Preckwinkle, Frank Shuftan, said in a statement that the tax is critical to the county’s 2017 and 2018 budgets, as well as taking a step towards important health concerns, and said “opponents of the tax continue to spread misinformation.”
“We are committed to responsibly managing Cook County’s finances, making difficult decisions where and when necessary, and continuing to provide the critical public health and public safety services our residents expect that together comprise 87 percent of our operating budget. And we will vigorously defend our position and the ordinance in court,” he said.
The retailers are represented by Jordan Goodman with Horwood, Marcus & Berk in Chicago.
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