Appeals Court: Sorry, Still No Soda Tax For You, Chicago

Image courtesy of J-J-W

Cook County, which encompasses the city of Chicago and a bunch of its suburbs, passed a $.01 per ounce tax on sweetened beverages last year. The tax was supposed to go into effect on July 1, but a state judge put a temporary restraining order in place that keeps the tax from going into effect, though certain McDonald’s restaurants didn’t get the memo. Now a state appeals court has upheld the decision, leaving drinks untaxed for now.

Cities including San Francisco, Oakland, Philadelphia, and Seattle have put similar taxes in place in recent years, which impose a small tax per ounce at the distributor level on beverages sweetened with sugars and/or non-nutritive sweeteners.

The Illinois Retail Merchants Association filed a temporary restraining order meant to prevent the tax from going into effect. The trade group claims that the uniformity clause of the state’s constitution, which requires that items in the same category be taxed in the same way. The Chicago Tribune reports that an appellate court upheld the decision. That’s good, but what’s a uniformity clause?

“Specifically, the ordinance taxes ready-to-drink, pre-made sweetened beverages, but generally excludes sweetened beverages made on demand,” the group explains. A super-syrupy iced latte might have more sugar than a bottle of Mountain Dew, but the former will be subject to the tax while the latter won’t.

IRMA also compared bottled iced tea with an iced tea that might have a sweetener and lemon added to it and is shaken by a restaurant employee before serving. The items are substantially the same, but not taxed accordingly.

Tomorrow, the court will hold a hearing on the trade group’s preliminary injunction, which it hopes will stay in place until a higher court decides on the legality of the tax in the first place.