Chicago Set To Repeal Soda Tax.

Last November, the Cook County Board of Commissioners passed a bill that taxed “sweetened beverages” at the rate of $0.01 (one cent) per ounce. The tax was implemented in July of 2017.

For those who are interested in what drinks the tax covered, the bill defines “sweetened beverage” as:

Sweetened beverage means any non-alcoholic beverage, carbonated or non-carbonated, which is intended for human consumption and contains any caloric sweetener or non-caloric sweetener, and is available for sale in a bottle or produced for sale from using through the use of syrup and/or powder. Sweetened beverage does not include (1) beverages consisting of 100% natural fruit or vegetable juice; (2) beverages in which milk, or soy, rice, or similar milk substitute, makes up more than 50% of the beverage or is the first listed ingredient on the label of the beverage; (3) beverages to which a purchaser can add, or can request that a retailer add, caloric sweetener or non-caloric sweetener; (4) infant formula; (5) beverages for medical use; (6) any liquid sold as a therapeutic nutritional meal replacement or for use for weight reduction as a meal replacement; or (7) any syrup or powder that the purchaser himself or herself combines with other ingredients to create a beverage.

Clear as mud, right?

The tax set off an advertising war between retailers, soda manufacturers, and tax opponents against outside interests such as Michael Bloomberg of New York.

Proponents of the tax said it would aid in the fight against obesity in adults and children. In fact, if one reads the bill, that is all the bill talks about – the effects of sweetened drinks on health. Opponents talked about how the tax was regressive in impacting the poor more than the rich, penalizing people for making choices, the increase of the nanny state, outside influences, and just the fact that the tax is another tax in a area where residents are highly taxed on everything.

According to Reuters, the tax is set to be repealed:

The Cook County Board’s finance committee has voted to repeal a penny-per-ounce tax on soda and other sugary drinks that has riled many Chicago-area residents.

The vote sets the stage for a final vote on Wednesday to repeal the tax, which aroused the ire of consumers and retailers who say their businesses have been adversely affected.

The tax passed last year when Board President Toni Preckwinkle cast the deciding vote after commissioners deadlocked on the measure. Preckwinkle has said there could be an 11 percent budget cut resulting in layoffs with repeal of the tax.

The committee on Tuesday voted 15-1 for repeal of the tax.

Preckwinkle has not said whether she will veto the repeal measure. However, those supporting repeal say they have enough votes to override a veto.

There’s a disconnect here that you may have missed.

The tax was passed with the idea that it would help prevent obesity. Yet Preckwinkle says that without the tax, Chicago would have to cut services, have layoffs, etc.

In other words, the tax was never about the health of people. That was just an excuse. The real reason behind the tax was the City’s insatiable need for revenue.

(It is also interesting to note that the numbers of an “11 percent budget cut” don’t add up. The soda tax was supposed to bring in an additional $200 million dollars per year. If that $200 million is 11% of the budget, that would make the entire Chicago budget $1.818 billion dollars. That would be news to the City of Chicago itself as according to the 2017 Budget, the amount of the budget is $8.22 billion and when combined with state and federal grants, the budget climbs to $9.81 billion. We are absolutely shocked to conclude that Preckwinkle lied about the figures. Shocked we tell you. After all, who would ever expect a politician to lie about money and taxes?)

Chicago has a budget problem. They are losing money and operating at a deficit each and every year. One would think that looking at spending would be a part of the solution. One would be wrong:

While the budget proposal attempts to identify areas for the city to save money, it also identifies places to expand and spend. Things such as a $50 million investment in critical youth services, repaving 300 miles of neighborhood and arterial streets, and a $500 million investment to replace 90 miles of water, 72 miles of sewer, and install 14,000 sewer structures and 20,000 water meters were also outlined by Mayor Emanuel. But much of the mayor’s budget proposal makes Chicago look more like an undesirable place to live, and not the other way around.

Remember, these spending items are an expansion of spending within the City. More taxes apparently means more spending.

The effect on these never ending taxes is telling:

In addition, Emanuel’s proposed 2016 budget will establish a $9.50 monthly fee per household for garbage pickup (this fee is expected to generate more than $60 million) and also become the first big city in the country to tax e-cigarettes (which is expected to generate $1 million).

But here is the problem with all of this, the majority of the funds that will be used in an attempt to tackle the city’s debt comes from increased taxes. Chicago already has the highest sales tax of any big city in the nation and is also always right near the top as far as things like gas prices go, as well. Increasing taxes even further in other areas is going to continue to push people and businesses out of the city.

Currently, Chicago has around 2.7 million people living within city limits (and has been steadily losing residents for years). By 2025 that number is expected to drop to 2.5 million residents. Surely, eliminating residents is not the way to solve Chicago’s financial issues. But that is what is going to keep happening the way the budget and the city itself is trending right now.

The lesson should be clear: more taxes drives people and businesses away to areas and cities that are more tax friendly and where people can keep more of their money in their pockets.

That is the point of this post.

Chicago is 1200 miles from us here in Brevard County, but we see the same things – the same taxing and spending mentality – that has gotten Chicago (and frankly, all of Illinois) in financial trouble here in Brevard.

Far too often we have seen governments say “we need to increase taxes / fees” only to increase spending.

Whether it is a soda tax or a school tax or a lagoon tax, the important thing to remember is that it is never really and truly about the issue the taxes are supposed to address.

It’s always about the revenues.

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