Court Halts Chicago Soda Tax, But Some McDonald’s Restaurants Didn’t Get The Message

Image courtesy of James Crawford

Only hours before a new tax on sweetened beverages was set to kick in, an Illinois judge issued a temporary injunction keeping it from going into effect. However, not everyone got that message and some McDonald’s customers in the Chicago area were charged a tax they shouldn’t have paid.

Last year, Cook County, IL, which includes the city of Chicago, approved a “Sweetened Beverage Tax” that imposes a cent-per-ounce on all bottled (and fountain) sweetened drinks — even those that use non-sugar sweeteners like aspartame or sucralose.

Just like the similar tax in Philadelphia, the Cook County tax is now the subject of legal action by businesses that would be directly affected by higher prices for sweetened drinks.

With the tax set to take effect on July 1, a Cook County circuit court judge issued a temporary restraining order [PDF], noting that while the tax is important for the county’s budget, it is “necessary to maintain the status quo in order to protect the interests of all consumers, all taxpayers, and the effected [sic] merchants.”

If the court had allowed the tax to go into effect only to later find it unlawful, the plaintiff merchants “will be irreparably harmed” and “will suffer from greatly increased administrative and overhead costs which could not be recouped.”

Just ask the McDonald’s franchisee who operates nearly two dozen fast food locations in the Chicago area, and who didn’t get the message that the soda tax was on hold.

Some customers told the Chicago Tribune that they were charged the tax even after bringing it to the attention of store employees.

The owner of those locations says the problem, which he dubbed a “technical issue,” has been fixed and that customers who were charged the tax can get a refund if they have a receipt.

The Illinois Retail Merchants Association, the lead plaintiff in the lawsuit, said the McDonald’s incident is evidence that “The county has not properly communicated with retailers throughout this entire process.”

Later this month, the judge will decide whether to issue a longer injunction that would halt the ban until the merchants’ lawsuit is resolved.

[h/t Courthouse News]