CHICAGO (CN) – Cook County defended its new sweetened-beverage tax in court Friday after it was put on hold three weeks ago, arguing against claims that it is unclear and does not apply uniformly to different types of drinks.
A lawsuit challenging the tax was filed just days before retailers in the county were to start charging consumers a whopping penny per ounce on sugary drinks such as soda, sweetened coffee and teas and energy drinks in the stated interest of public health.
Cook County Circuit Court Judge Daniel J. Kubasiak granted a temporary restraining order to halt the tax for now, just one day before it was set to take effect July 1.
The Illinois Retail Merchants Association, along with a group of grocers, claim the tax violates the state constitution because it does not apply uniformly to all sweetened beverages and is too vague.
Under the ordinance, a bottled drink would be taxed whereas the same thing custom-made at a restaurant would not be. For example, a bottled Starbucks Frappuccino purchased at a grocery store would get the extra tax, but the same drink made by a barista at a Starbucks store wouldn’t.
The plaintiffs also took issue with the fact that they cannot charge tax on purchases from customers using federal Supplemental Nutrition Assistance Program, or SNAP, benefits, causing an administrative headache for stores.
Kent Ray, an assistant state’s attorney, said in Friday’s court hearing over a motion to dismiss the lawsuit that Cook County doesn’t have to charge the tax on every drink with sugar in it for the ordinance to be valid.
The county claims there is a difference in custom-made drinks since it is harder to tell how much sweetener goes into each drink based on customer requests, and taxing those drinks would put a burden on the businesses selling them.
“I think it’s important that the government has a basis for making distinctions,” Ray said.
“The uniformity clause is not a straightjacket,” he added. “There is certainly no need to tax all beverages with sweetener in them for this tax to be sustained.”
David Ruskin, one of the plaintiffs’ attorneys with Horwood, Marcus & Berk Chartered, said, “If the purpose of the ordinance is to promote health, it has to be reasonably related to that.”
Ruskin argued that “there are no real and substantial differences between [ready-made and custom-made] beverages,” as both can have sweetener in them.
“The health concerns are the same,” he said.
James Beligratis, another assistant state’s attorney arguing for Cook County, said that retailers claiming they will have a problem in ringing up SNAP customers had a technological issue, not one that makes the ordinance unconstitutionally vague.
The retailers were not claiming that they didn’t understand the ordinance, Beligratis argued, just that they have a problem with it.
Plus, he added, they already sell other food items to SNAP customers without collecting taxes on them.
Ruskin countered that Cook County created its own problem by adding language to the ordinance requiring the tax to be included in the sales price of a drink, causing confusion as to how to separate the tax from the rest of the cost.
“There’d be a lot of guessing” if the average person were to interpret the ordinance, Ruskin said. “It is absolutely not clear.”
While public health is the stated reason for the ordinance, county officials have admitted the revenue from the tax, estimated at $17 million per month, is critical for its operating budget.
Three hundred county employees were laid off last week due to the missing funds, which cannot be collected yet thanks to the temporary restraining order.
One hundred and ten more people were let go from the Cook County Sheriff’s Department earlier this week.
County Board President Toni Preckwinkle predicted that up to 1,100 jobs may be lost if the tax is permanently shot down.
The temporary restraining order will stay in place until next Friday, July 28, when Judge Kubasiak will issue his order on the county’s motion to dismiss the lawsuit.