The Cook County Sweetened Beverage Tax Ordinance would apply a tax rate of $0.01-per-ounce fee on bottled sweetened beverages and drinks produced from syrups using a beverage-dispensing machine.
The ruling came a few days after the Illinois Retail Merchants Association (IRMA) challenged the county’s sweetened beverage tax, claiming it violates the Illinois Constitution and is too vague for Cook County retailers to follow.
“If enacted, Cook County retailers would be unfairly exposed to lawsuits for failure to comply,” Rob Karr, president and CEO of IRMA, said.
Cook County Circuit Court Judge Daniel Kubasiak granted IRMA the temporary restraining order until July 12, 2017, when a hearing on the preliminary injunction is scheduled.
Tax is ‘impermissibly vague’
IRMA said that the sweetened beverage tax violates the uniformity clause of the Illinois Constitution because it creates classifications of taxable sweetened beverages applying to ready-to-drink beverages and drinks from fountain machines, but not sweetened beverages made on demand.
“A ready-to-drink sweetened iced tea served out of a chilled beverage urn is taxable, but a sweetened iced tea that is shaken behind the counter before giving it to the customer is not taxable. The beverages are substantially similar, except for the ‘shake’ before giving it to the customer,” the group stated.
“Additionally, the ordinance is impermissibly vague and fails to provide precise application under the circumstances it is intended to operate, creating a burden on retailers to accurately calculate the proper amount of tax.”
Even though the tax did not officially go into effect, some Cook County businesses, such as McDonalds, have charged its customers the extra sugar sweetened beverage fee for its soda fountain drinks. The franchise owner of 22 Cook County McDonalds locations has said he will offer refunds to customers who paid the sweetened beverage tax fee.
Cook County and public health response
The Cook County Department of Revenue has filed an appeal seeking to vacate the temporary restraining order granted by Judge Kubasiak.
The tax was estimated to generate $73.7m in FY2017 and $200.6m in additional revenue for FY2018 aiding the county’s budget deficit of $174.3m from FY2017, according to Cook County Board President Toni Preckwinkle.
“Revenue from the tax is critical to both balancing our FY2017 budget and development of our FY2018 budget,” Preckwinkle said.
“As the litigation proceeds, we will continue to aggressively defend our ordinance.”
The Illinois Public Health Institute said that while it is “disappointed about this temporary setback, we are confident that the sweetened beverage tax will soon be implemented and our communities will experience the health benefits that come from drinking less sugar.”