Judge Temporarily Blocks Cook County Sweetened Beverage Tax

CHICAGO (CBS) — A Cook County judge has agreed to temporarily block a new sweetened beverage tax, handing a victory to retailers who claim it is unconstitutional.

Circuit Judge Daniel Kubasiak agreed to issue a temporary restraining order preventing the county from implementing the penny-per-ounce tax at least until July 12, while he weighs a lawsuit filed by the Illinois Retail Merchants Association. The tax was set to go into effect on Saturday.

Another hearing has been scheduled for July 12, when the judge will hear from witnesses before deciding whether to issue a longer-term injunction blocking the tax.

The tax would apply to all sugary soft drinks, lemonades, teas, sports drinks, and sweetened powders and syrups used for fountain drinks. It also would include drinks made with artificial sweeteners.

Retailers claim the new tax is unconstitutionally vague, and isn’t applied uniformly to the same drinks. They also argued it would have been too difficult for businesses to begin collecting the tax on Saturday, due to a number of changes the county had made to the ordinance in recent weeks.

“We are very pleased with the judge’s decision today. The retailers in this county are absolutely relieved. They were not going to be in a position tomorrow to be able to implement this tax. It was of grave concern to them, to potentially be out of compliance with the county’s ordinance,” IRMA vice president Tanya Triche Dawood said.

County Board President Toni Preckwinkle’s office said it plans to appeal the judge’s ruling, and ask the Illinois Appellate Court to vacate the temporary restraining order. In a statement, she said revenue from the tax is critical to balancing the 2017 budget and planning next year’s budget.

“As a result of the injunction and its timing, I have asked my Finance Department to look at all options to compensate for the revenue that would have been generated by the tax. Because we are now more than halfway into our fiscal year, we must immediately look at holdbacks, efficiencies and – because 87 percent of General Fund expenditures are personnel-related — a substantial number of position reductions each month that collection of the tax is delayed. Finally, because 46 percent of our budget is spent on public health and 41 percent on public safety, any such reductions would disproportionately impact these areas, as we have long cautioned. As the litigation proceeds, we will continue to aggressively defend our ordinance,” Preckwinkle said.

County officials have estimated the tax would generate $17 million a month in revenue. Without it, attorneys said the county would have to cut staff from jails, courts, the public defender’s office, and the state’s attorney’s office.

“This is largely a problem that the county created, and so we are not sympathetic to that issue,” Triche said.

Supporters have said the tax will make kids healthier, and reduce obesity.

“Of course we’re disappointed in this temporary setback,” said Elissa Bassler, CEO of the Illinois Public Health Institute. “We believe that sugary drink taxes are a very effective public health intervention that help to address chronic diseases like diabetes, heart disease, some cancers.”

However, opponents have noted the tax would apply to diet drinks with no calories and no sugar, and would exempt sugary drinks like 100 percent fruit juice and sweetened coffees served behind the counter.

Retailers also have noted they must either charge customers tax on the ice in fountain drinks, unless they fill out paperwork to designate how much ice each cup holds. Complicating matters, most fast food restaurants that serve fountain drinks allow customers to decide how much ice to put in their drinks.

Kubasiak asked attorneys Thursday why the target is sugar and sweeteners if the reason for imposing it is improved health. He asked why similar taxes were not imposed on foods that are salty or fatty.

The county’s attorneys could not answer.

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