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Although Mayor Emanuel had asked for Chicago’s aldermen to float potential ideas to raise revenue for the city, it seems increasing the existing tax on sugary drinks and soda an additional $0.01 per ounce is not among the winning proposals.
Yesterday evening, the public, special interest groups and the mayor expressed concern over the measure, noting that Chicago has already taxed soda to the maximum allowed, and that other “sources of revenue” – specifically a new surcharge on garbage collection and a possible property tax hike – are on the table.
A long-stalled proposal to add a penny-per-ounce Chicago tax on pop and other sugary drinks got a hearing at City Hall on Wednesday, but it failed to gain traction amid a strong lobbying pushback and a lack of support from a mayor who is pursuing his own series of tax hikes.
Mayor Rahm Emanuel had asked aldermen to bring forth ideas to generate more revenue in light of a massive pension payment that’s coming due, and so 12th Ward Ald. George Cardenas, who is City Council Health Committee chairman, revived his “Chicago sweetened-beverage tax” proposal…
Some aldermen are cool toward the soda tax idea, fearing it would hit poor people hard and hurt businesses as shoppers take their business to nearby suburbs.
“I already know what people in my neighborhoods think,” West Side Ald. Emma Mitts, 37th, said outside the hearing. “They don’t want it. They don’t want to hear about tax upon tax upon tax. This nickel-and-diming by piling little taxes onto people is not the right way to deal with the financial problems we’re facing.”
Not only that, but there’s already a soda tax at work in Chicago. According to the Tribune, Chicago has a 3% tax on soft drinks you purchase in cans and bottles and a whopping 9% tax on the wholesale price of soda syrups, which most restaurants use in their soda dispensers. And that is in addition to the 6.25% sales tax collected on soda; sugary drinks don’t count as “qualifying food” under Chicago’s graduated sales tax plan, so they are taxed at a higher rate than most other foods, which are taxed at only 1%.
Alderman Cardenas floated the “pop tax” under the theory that not only would it increase financial intake, but that it would cut healthcare costs for the city in the long term, thus both saving money and creating revenue for the city. A study by the Tax Foundation found that the latter claim is simply untrue: soft drink consumption has declined steadily over the last decade, though that decline has done little to stem the tide of obesity. In fact, a tax on soda simply inspired people who make unhealthy choices in beverage consumption to switch what they consume to alcoholic beverages, thus actually increasing their daily caloric intake. A Mercatus Center study released in March also noted that soda taxes, like many sin taxes, disproportionately affect the poor, meaning that those who would be responsible for paying the lion’s share of the tax would be those least likely to be able to afford it.
As for whether the increase would help Chicago correct it’s budget woes, even the highest projected outcome – $134 million in revenue – would do little for the city’s empty coffers. According to Ald. Cardenas’s own proposal, a mere 25% of collected revenue would make it into the city budget. 75% of the revenue would be directed into a “Chicago Wellness Fund,” a slush fund that would be used to pay for undefined “health and wellness initiatives” for the city of Chicago and in Chicago Public Schools. So, in short, the money would be spent on new programs that aren’t in the budget just yet; raising money just to spend it.
This time, it appears that city council members have finally caught on to the scam. Unfortunately, it may just be a temporary reprieve until they find a new tax to levy.