Business Owners Say Cook County Soda Tax Hurting Small Stores, Restaurants

CHICAGO (CBS) — Business leaders from across Cook County said the new sweetened beverage tax is unfair to stores and restaurants, and will have a devastating economic impact.

Illinois Food Retailers Association president Brian Jordan said, since the penny-per-ounce tax covers low-calorie and zero-calorie drinks made with artificial sweeteners, it amounts to no more than a money grab, rather than an effort to fight obesity as the Preckwinkle administration has argued.

“What’s even more unbelievable is that the county is now going after $17 million for the revenue that they say they lost during the temporary restraining order. What does that tell us? That tells us that the county is not concerned about health. They’re only concerned about their budget,” he said.

The sweetened beverage tax went into effect on Wednesday. It originally was supposed to begin July 1, but was blocked by a judge when the Illinois Retail Merchants Association filed a lawsuit seeking to overturn the tax. The judge dismissed the lawsuit last week, opening the door for the county to begin collecting the tax.

Niles Chamber of Commerce executive director Katie Schneider said the new tax would put many independent- and family-owned stores and restaurants out of business. She said those businesses are “really the character and the uniqueness of a town like Niles, and for a lot of these communities here, just like the city of Chicago.”

Many restaurant owners have said they will see their water bills rise, as customers switch away from sweetened beverages to water to avoid the tax.

George Alpongianis said he owns several restaurants, and must pay $200,000 a year in taxes and fees to Cook County for each of them before adding the new soda tax.

“Business licenses, liquor licenses, property taxes, an environmental tax, utility tax, a cable tax, and a phone tax,” he said.

Fellow restaurant owner Jo Shah said she can’t afford to pass along the cost of the new tax to her customers.

“It’s a difficult tax; $200,000 before we even open the door, and we can’t go to our people who come in and say, ‘Oh, could you loan us another $200,000, or we’re going to tax you more,’ because we don’t have that right. We can’t do it, but the county can,” she said.

Store owners across the county line said they already have lost customers to stores in neighboring counties without the tax.

The first day of the tax was marred by problems, with many stores charging customers the tax on drinks not covered by the county ordinance.

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.

Sparkling water also is supposed to be exempt, but a Walgreens store in Streeterville rang up a 12-pack of La Croix with a sweetened beverage tax charge of $1.40 and refused to remove it when questioned. A mom-and-pop store on Division Street also erroneously charged 17 cents tax on a bottle of Iced Mountain sparkling water.

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