Cook County Soda Tax Temporarily Put On Hold By Judge

A judge issued a temporary restraining order against Cook County's soda tax Friday, pumping the brakes on a penny-per-ounce tax on sweetened beverages sold in the county, according to reports. The first day for the tax to be applied to purchases was to have been Saturday, and county officials estimated it would generate around $200 million annually.

"The Court is fully aware of the importance of the tax to Defendant's budget," Cook County Judge Daniel Kubasiak wrote in granting the restraining order, according to the Chicago Tribune. "However, the Court believes it is necessary to maintain the status quo in order to protect the interests of all consumers, all taxpayers, and the effected merchants."

The request for the temporary injuction was part of an 11th-hour lawsuit by retailers, who contend the tax is unlawful and vague. The Illinois Retail Merchants Associations, along with several area grocers, filed the lawsuit Tuesday, and Kubasiak heard arguments during a hearing Thursday. (Get Patch real-time email alerts for the latest news for Chicago — or your neighborhood. And iPhone users: Check out Patch's new app.)

The retailers' lawsuit claims the county tax lacks uniformity when it comes to its application, according to the Chicago Sun-Times. For instance, a bottled coffee drink sold in a store would be taxed, but a similar beverage made by a coffee shop employee wouldn't the report added. That type of inconsistency, the lawsuit argues, violates the Illinois Constitution.

Retailers claim the temporary injunction is to protect them against possible class-action suits from consumers asking for refunds if the county tax is struck down in court after being implemented, the report stated. And while it's up to consumers to pay the penny-per-ounce tax, businesses can be fined — $1,000 for the first offense, $2,000 for the second — if they don't collect the tax, the report added.

The county is asking that the retailers' lawsuit be thrown out, and the next hearing on the tax is July 12, the Sun-Times reports. Attorneys for the retailers have 28 days to file a brief with the court arguing against dismissing the lawsuit. After that, the county will have two weeks to respond, the report added.

More via the Chicago Tribune and the Chicago Sun-Times

UPDATED (5:53 p.m. Friday, June 30)

ORIGINAL STORY

Starting Saturday, thirsty Cook County consumers buying a can of Mountain Dew or a bottle of Yoo-Hoo won't just be worrying about the toll that soft drink will take on their waistline or their dental health. They'll also need to be concerned about the additional toll on their wallet thanks to the county's controversial new soda tax.

The county's penny-per-ounce tax on soft drinks and other sweetened beverages is set to go into effect Saturday, July 1. The only thing potentially in its way is a last-ditch effort by retailers who are asking for a temporary injunction against the tax, claiming it's inconsistent and vague. A judge will rule on the temporary injuction Friday afternoon. (Get Patch real-time email alerts for the latest news for Chicago — or your neighborhood. And iPhone users: Check out Patch's new app.)

If the 11th-hour injunction is unsuccessful, what should Cook County residents — and anyone who wants to enjoy a sugary drink in the county — know about this new tax? Patch breaks down and answers some of the big questions surrounding this contentious measure.

How does the county define "sweetened beverage"?

According to the Cook County, a "sweetened beverage" is a drink that contains sugar or artificial sweetner. That includes carbonated soft drinks, fruit drinks that don't contain 100 percent juice and sports and energy drinks. And it doesn't matter how those beverages are delivered. Bottles, cans and fountain drinks all get taxed.

Maybe the better question is what beverages are exempt from the tax?

The county's list of beverages that won't be taxed includes:

• 100 percent natural fruit or vegetable juice, syrup and/or powder with no added sweeteners
• milk or milk substitutes (such as soy or rice milk)
• unsweetened drinks that have the sweetener added at the point of sale
• infant formula
• medical beverages
• weight reduction or meal replacement beverages
• any syrup or powder that the customer combines with other ingredients to make a beverage

Beverages purchased using food stamps also are exempt from the tax.

Bottom line: How much will a Coke set me back?

It all depends on how big that Coke is. A 2-liter bottle will have an extra 68 cents tacked on, and a six-pack of cans of the soft drink will include an additional 72 cents added to the cost (not counting sales tax).

But what about a 32-ounce fountain drink with ice? Will I get taxed for ounces I'm not getting?

Here's some of the tax's murkiness that retailers complained about in their lawsuit. How a customer is taxed for an ice-filled fountain drink will be up to the business selling the beverage. If they use cups with "ice-fill lines, then they can tax the beverage minus the ice, the tax's guidelines state. For instance, a county spokesman told the Daily Herald that McDonald's has submitted the necessary documentation to do this.

RELATED: Is A Sweetened Drink Tax In Cook County A Sour Idea

What happens, though, with business that doesn't use cups with ice-fill lines? Or businesses that let customers add their own ice? Does one party get shafted in those cases? Unfortunately, that's a possibility. Retailers can tax on the size of the cup regardless of how much ice is in it, meaning customers might end up paying 32 cents for less than 32 ounces of "sweetened beverage."

"How they fill up the cup is an issue between them and their customers," Frank Shuftan, a spokesman for Cook County Board President Toni Preckwinkle, the driving force behind the tax, told the Herald.

Why was this tax proposed in the first place?

Check out the county's FAQ about the soda tax, and it will give this reason for why it was implemented:

"The tax was adopted by the Cook County Board of Commissioners to decrease the consumption of sweetened beverages and encourage the adoption of healthy beverage options due to the link between such beverages and obesity, diabetes and other health conditions."

It doesn't take a cynical mind, however, to realize the driving force behind any tax comes down to one thing: money. And while county officials might be concerned with the overall health of residents, they're also concerned — some might argue moreso — with the overall health of the county's coffers.

When Preckwinkle introduced it in October as part of the county's budget for the 2017 fiscal year, the soda tax was projected to generate about $74.6 million. Now that it's hours away from becoming a reality, the county estimates that the tax could create around $200 million in revenue.

In order to gather support for the tax, Preckwinkle also pledged not to raise county taxes for at least the next two fiscal years if Cook County Board members approved the tax.

What's up with the lawsuit?

The suit was filed Tuesday by the Illinois Retail Merchants Associations, as well as several area grocers. After a hearing Thursday, they're hoping a judge will rule to grant a temporary restraining order and halt the tax's implementation Saturday. Their lawsuit also wants the tax to be called invalid, meaning a new measure would need to be drafted to address vagueness and inconsistencies that make the tax a compliance minefield for businesses.

Retailers argue that issues such as the previously mentioned questions surrounding how to tax ice-filled cups leave them open to fines and other punitive measures for not following the tax's guidelines, according to the Chicago Tribune. The lawsuit also contends that the sweetened beverages should be taxed uniformly, and how they're prepared or served shouldn't affect it, the report added.

Cook County Judge Daniel Kubasiak is scheduled to rule on the temporary injunction Friday afternoon, the report states.

Go to Cook County's website for more information about the sweetened beverage tax, including a frequently answered questions page.

More via the Daily Herald and the Chicago Tribune

Photo via Pixabay

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