Aldermen Consider Sugary Drink Tax At Public Hearing
CHICAGO (CBS) -- At least one alderman has called it a sweet idea -- a penny-an-ounce tax on sugary drinks -- but it's left a bad taste in the mouths of Chicago restaurants and retailers.
Ald. George Cardenas (12th), chief sponsor of the so-called "sweetened beverage tax," said it would be easier for Chicagoans to swallow than the new $11- or $12-per-month garbage collection fees Mayor Rahm Emanuel has told aldermen he will include in his 2016 budget plan.
Cardenas chairs the City Council Health Committee, held a public hearing on the sugary drink tax on Wednesday. He has argued the tax would help combat health problems like diabetes and obesity. He has estimated it could generate $134 million in new revenue for the city, and more than replace the $100 million in garbage collection fees the mayor's office has suggested.
The penny-an-ounce tax on sugary drinks would include soda, energy drinks, juices, and teas. Consumers would pay $1.44 more for a 12-pack of 12-ounce cans, and 66 cents more for a two-liter bottle.
The tax also would apply to fountain drinks, as well as syrups and powders used to make soda or other sugary drinks at home.
The plan has met with opposition from the Illinois Retail Merchants Association, the Illinois Restaurant Association, and the American Beverage Association.
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Illinois Retail Merchants Association general counsel Tanya Triche said relying on the sugary drink tax to replace revenue from a garbage collection fee is a losing idea.
Beverages Subject To Sugar Tax
"When you're talking about a garbage fee, you're talking about a stable source of income: home ownership, which has been fairly stable in the city of Chicago. When you're talking about a consumption tax, like this, it's an unstable source of revenue, because people can easily avoid it by going outside of the city to purchase those products. So, why you would replace something that's stable with something that's not stable defies logic," she said.
Illinois Restaurant Association president Sam Toia said the sugary drink tax would hurt businesses, and cost jobs.
"This tax would drive up costs for thousands of restaurants in our city; increase prices for diners, shoppers, and families; and ultimately reduce jobs," he said. "The restaurant industry, we're getting nickeled and dimed to death. We had the entry-level wage go up, the Affordable Care Act, we look like we're going to have property taxes going up, and now it looks like there could be a third tax on soda pop."
Cardenas said the tax is a way to hold the soft drink industry accountable for its unhealthy sugary products.
"You have Coca-Cola in this case, and if I can say so, spending a billion dollars in marketing," he said. "How do we counter that with children being bombarded by sugary drinks?"
However, the groups noted Chicago already levies two separate taxes on soda -- a 9 percent fountain drink tax paid on the syrup in sugary drinks and a 3 percent soft drink tax on cans and bottles of soda -- which have not succeeded in reducing consumption of sugary drinks or fighting obesity and diabetes.
Former city Corporation Counsel Mara Georges joined the business groups to say the tax would be unconstitutional, because the city's taxes on sweetened drinks already are at the limit set by the state, and any increase would have to be applied to all goods equally at this point.
The state could raise the limit on the soft drink tax, however.
No vote taken was at Wednesday's hearing on the sweetened beverage tax, and Emanuel's office has not said if he supports the idea.
