Soda Tax in Cook Country Blocked by Judge

On Friday, a judge blocked the one cent per ounce tax in Cook County, Illinois on soda and other sweetened beverages until at least July 12. The tax would have gone into effect on July 1.

The ruling from a circuit judge to grant a restraining order came just days after several grocers and the Illinois Retail Merchants Association filed a suit against the Department of Revenue in Cook County seeking to block the implementation of the new tax, which they say is too vague and unconstitutional.

During recent days, it has been common to see inside stores consumer stocking up on soda as well as other beverages that would fall under the soda tax. Retailers that are located outside Cook County limits mentioned the tax while advertising.

Officials in Cook County say that the tax was necessary to cover services and will help improve the health of the public over time.

The length of the temporary restraining order and whether the judge decided later to permanently block the soda tax that covers a wide range of artificially and sugar sweetened beverages, will be a determination in the amount the county will need to adjust its budget.

In 2017, the county’s operating budget has spending of $4.4 billion. Of that amount, $67.5 million was to come from the new beverage tax. The amount is not quite $17 million per month if based on four months of taxes from beverages coming in during the remainder of the county’s fiscal year.

In 2018, the county was planning to take in over $200.5 million in beverage taxes. Without that revenue, substantial spending cuts are likely to take place, unless other fees or taxes were raised.

The temporary order means the county cannot impose the tax on sweetened beverages until July 12, when there is a scheduled hearing on the injunction announced on Friday.

The question of the tax being unconstitutional will not be taken up until another later date.

Retailers argue that under the Constitution in Illinois similar objects should receive a uniform tax. Under the tax for sweetened beverages, drinks in bottles or from fountain machines are taxed.

However, on demand beverages that are custom-sweetened like those made by a barista or server are not taxed. Other drinks exempt from the tax included purchases made through food stamps.

The county says that if this tax is determined to be unconstitutional the dollars collected would be refunded.