Latest Soda Tax Headache: Feds Say It Violates Food Stamp Rules

(CBS) — The U.S. Dept. of Agriculture has warned Illinois government if Cook County continues to collect sweetened beverage taxes from food stamp recipients, it could lose millions in funding.

USDA is taking a hard line when assessing what constitutes a violation.

Say you’re a SNAP client, you buy a soda, you are charged the tax but you get an immediate refund. You may think no harm, no foul, but Illinois Retail Merchants Association Vice President and General Counsel Tanya Triche Dawood disagrees.

“It is absolutely a violation of our (Illinois) SNAP contract,” she tells WBBM’s Bob Roberts. “The USDA has been clear about that since Day 1. We’ve been clear about it since Day 1.”

The rule in question forbids food stamp clients from being charged any form of tax on the sweetened beverages. The county has offered merchants the immediate refund as a workaround, but Dawood said the prohibition is absolute and not curable by an immediate refund.

At issue is $86.8 million in federal funding for SNAP clients across Illinois – not just Cook County.

Cook County officials say they will continue to work with the USDA.

“At this time, we believe we are in compliance with existing SNAP rules. We do however recognize that USDA’s powers against the State in this regard are substantial and we will work collaboratively with both the State and USDA to address USDA’s concerns,” a spokesperson for Cook County President Toni Preckwinkle says.

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