Cook County Sweetened Beverage Tax Begins After Court Delay

CHICAGO (CBS) — A new penny-per-ounce tax on sweetened beverages has gone into effect in Cook County, but opponents continued the fight to have the tax thrown out.

The Illinois Retail Merchants Association has appealed a Cook County judge’s decision to dismiss a lawsuit that temporarily delayed the tax from going into effect. It originally was set to begin on July 1, but was delayed by the lawsuit, and then scheduled to go into effect on Wednesday.

Customers will have to pay the new tax when buying soft drinks or other sweetened beverages in Cook County. The penny-per-ounce tax means a two-liter bottle of soda will cost you 67 extra cents in tax, and a 12-pack of 12-ounce cans will cost an extra $1.44.

For retailers, it means putting in place a whole new system of collecting taxes and checking inventory. Business owners said it’s another way the county is making it more difficult for them to operate.

“Every year, there’s something new. You know, a cigarette tax, and now the bags, and now it’s soda tax. It’s just unbelievable. Hard to run a business like that, you know?” said Aruna Sathia, owner of a 7-Eleven on the Near North Side.

The tax applies to sugary soft drinks, lemonades, teas, sports drinks, and sweetened powders and syrups used for fountain drinks – including drinks made with artificial sweeteners. Exemptions from the tax include 100 percent fruit juice, milk-based drinks, baby formula, and other medical beverages. Drink powders and syrups like Kool Aid that a consumer adds sugar to at home also are exempt.

Adding to the confusion for some retailers and consumers is that coffee and tea drinks are treated differently, depending on how they are sold. A Starbucks Frappuccino made by a barista is exempt from the sugary drink tax, but the tax applies if it’s sold in a bottle.

Most restaurateurs are paying the penny-an-ounce tax directly to their suppliers. But how much should they pass along to customers? They still aren’t sure.

“This drink already right now is $2.50,” Palace Grill owner George Lemperis said, referring to a soda. “It’s going to be almost $3 bucks for a drink. You’re going to pay $3 bucks for this now? I don’t know.”

At Chicken Planet in the Loop, pop has been a bargain at $1 per glass with free refills. They, too, are struggling with what to charge.

“I have to lose money to keep the customer happy,” said Abid Moinuddin.

Here’s another complication for restaurants: if they sell a mixed drink, such as a rum and coke, they can’t charge the tax on the alcohol, but they can on the soda. So, how do they decide on a price?

Illinois Restaurant Association president Sam Toia said the confusion is one more reason he and retailers hope to have the tax thrown out.

“Everyone is scrambling how to figure this out,” Toia said, adding that he is not overly optimistic about an Illinois Retail Merchants Association legal appeal.

Attorneys have yet to decide if they might ask the Illinois Appellate Court to issue a stay of the sweetened beverage tax. If that were to happen, any taxes collected would be placed in escrow until a ruling is issued.

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