The sweetened beverage tax is an attempt to use taxation as a tool to promote better health choices while generating revenue to recover related health care costs. Tobacco was similarly taxed with consumption lessening gradually over time as the tax rate increased. The tobacco-revenue-generating fiscal policy led to the Smoke Free Illinois Act that took effect in 2008, banning smoking in most buildings and vehicles used by the general public.
Fifty years ago, 42.4 percent of U.S. adults smoked. The CDC reports that by 2014 that number decreased by almost half. The penny-per-ounce tax on flavored water, teas, juice and sports drinks has been dismissed by opponents as nothing more than a revenue grab — one, some say, that could cost the County Board President Toni Preckwinkle her seat in her 2018 bid for re-election.
The sweetened beverage tax passed last November with President Preckwinkle casting the rare tie-breaking vote. The tax was expected to generate $68 million to help balance the budget in fiscal year 2017. The Illinois Retail Merchants Association sued the county, resulting in a restraining order, preventing the tax from taking effect on July 1. Cook County Judge Daniel Kubasiak, however, ruled in favor of the county's request to dismiss the lawsuit. The temporary restraining order was lifted and Cook County began collecting the tax on Aug. 2.
A sweet tax repeal ordinance was introduced by Commissioner Richard Boykin (1st District) on Sept. 13 and subsequently referred to the finance committee, as a budget issue, with a hearing expected on Oct. 10 or 11. Preckwinkle is expected to veto the repeal if it passes with a simple majority, requiring commissioners to obtain a three-fifths majority, or 11 votes.
According to the World Health Organization, 42 million children under age 5 were overweight or obese in 2015, more than 500 million people worldwide were classified as obese and more than 422 million people with diabetes. The U.S. has the world's highest rate of obesity per population. In 2016 the state of Illinois produced a priority analysis of the local health department and a community health needs assessment. The results showed that the number one local health improvement priority category, consistent throughout the state, is nutrition, physical activity and weight status. Depending on the funding source, sweetened beverage consumption has consistently been linked to obesity and other adverse health conditions.
Healthier consumption decisions among Americans, however, are not keeping pace with the alarming rate of escalating health-care costs. According to Commissioner Boykin, arguably the most vocal opponent of the sweet tax, that is no excuse for government stepping in to tell Cook County residents what they can and cannot eat while calling it fiscal policy. Boykin recently declared in a press conference, "The soda pop tax and the president must go now!" Pointing to the threat of layoffs, he calls the tax dishonest government — "a false narrative."
In 2016, Fortune ran a story headlined, "Soda Consumption Falls to 30-Year Low in The U.S." Consumers seeking beverage alternatives they deemed healthier (i.e. without aspartame) was reported as the cause. Juices and flavored water benefited from that consumer choice. Beverage companies have become very sophisticated in their marketing once realizing perception is often what makes the difference in the choices consumers make.
In a recent speech to the City Club of Chicago, President Preckwinkle reminded commissioners that to repeal the sugar tax would threaten the county's safety net and ability to provide essential services. It would mean "firing frontline health care providers: doctors, nurses, and other medical professionals who help serve our most vulnerable patients, halting plans for expansion of Provident Hospital; Compromise the commissioners' constitutional duty to provide for the legal defense of those who cannot afford counsel by taking away money from the Public Defender's Office and forcing the already overworked public defenders to absorb another 6,400 cases; and reduce vital community investments in workforce development training programs geared at young people on the South and West sides."
Preckwinkle promotes the fact that Cook County has passed a balanced budget each of the seven years she has been in office; closed $1.8 billion in budget gaps; reduced the workforce by 10%; and with the help of the expanded insured population created by the Affordable Care Act, they have reduced the taxpayer allocation to Cook County Health and Hospitals System by $300 million, down 75%.
A University of Chicago professor described the Illinois property tax system as "a textbook example of institutional racism." Taxes like the amusement tax, bottled-water tax, emergency telephone system surcharge, gas tax, ground transportation tax, parking tax, bag tax, etc., are a sample of excessive regressive taxation. State Senator Don Harmon (39th) has run a Fair Tax campaign year after year. If the state, which owes Cook County millions, had paid its bills and Illinois legislators found the political will to pass a progressive income tax, Cook County and other taxing bodies could be positioned to pass more progressive taxes.
Big Soda companies like Coca-Cola and Dr. Pepper-Snapple are contributing the maximum amount allowed by law to support the repeal effort. The American Beverage Association and former New York City mayor Michael Bloomberg are funding the campaign in support of the soda pop tax, with Bloomberg pledging "whatever it takes." The Illinois Manufacturer's Association formed Government Accountability PAC, a fund with no contribution limits, which targets backers of the tax, in support of the Illinois Retail Merchants Association repeal efforts.
Preckwinkle asked, "So why is Big Soda OK with selling our vulnerable kids liquid sugar, which they know is bad for them? The answer, of course, is because it's their business."
Will the "Sweet Tax" or "Big Soda" prevail? We may find out this week.
Answer Book 2017
To view the full print edition of the Wednesday Journal 2017 Answer Book, please click here.
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