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Taxing soda drinkers will produce new revenue, but may not produce hoped-for results

COOK COUNTY RECORD

Tuesday, December 24, 2024

Taxing soda drinkers will produce new revenue, but may not produce hoped-for results

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CHICAGO – Cook County will be among the growing number of local governments across the country to slap a tax on sugary and sweetened beverages, after the Cook County Board signed off on a proposal introduced by Cook County Board President Toni Preckwinkle to impose a special tax on those drinks as part of the county's new budget.

In other areas elsewhere in the U.S. on Election Day, Nov. 8, voters approved such taxes on people’s consumption of sugar-sweetened drinks, like soda.

But the taxes may not necessarily produce the kinds of results sought by supporters, including reduced obesity rates and enhanced revenues, according to an analysis from The Tax Foundation.

The Foundation estimated such taxes largely place an economic burden on families with lower incomes or others whose lifestyle choices may not be supported by many in positions in power.

Per the Census Bureau, there are more than 5 million people in Cook County, and nearly 58 percent of Cook County's residents are minorities. Polling by Gallup says, across America,  45 percent of people with incomes less than $30,000 a year drink more soda than those making more than that annually.

Director of State Projects for the Tax Foundation Scott Drenkard told the Cook County Record that this type of taxing doesn’t help.

"The impact is not large and also the good indication for some consumers is, if you tax soda, they’re likely to substitute beverages from elsewhere in their diet,” he said.

He added that people will drink other non-taxed beverages like milk or even beer. Drenkard thinks that when counties propose these types of taxes, it just pushes people to other types of beverages or to buy their choice of beverage outside their county, as he said has happened in Philadelphia and San Francisco where similar taxes have been passed.

“There’s a soda tax in Philadelphia at a penny in half an ounce, and this only encourages people if they do try to buy soda, to purchase it outside of the city limit," he said. "Same situation in downtown San Francisco area.”

In a special report conducted by the Tax Foundation, "Overreaching on Obesity: Governments Consider New Taxes on Soda and Candy," studies show how taxing sugary drinks and candy doesn’t decrease obesity. 

“Soda and candy taxes do not necessarily decrease caloric intake. One recent study finds that when adolescents switch away from soda due to price increases, the drop in calories is offset by an increase in calories consumed in other food and drink,” the report said.

Drenkard believes that if taxes are to support city municipalities then everyone should be taxed, not just those who choose a way of life, he said.

“If this is going to pay for government services that everybody enjoys and makes use of, it makes sense to have a big broad-based tax, as opposed to this sort of approach, which is a very narrow targeted tax that only zones in at a couple of a small segment of consumer behavior," Drenkard said.

Cook County residents already pay the highest property tax in the nation, according to CoreLogic analysis. Also, Illinois residents pay one of the highest sales taxes in the nation.

The county's tax on sugary drinks, including carbonated sweet drinks, lemonade, energy drinks and sports drinks, but excluding 100 percent fruit juice, would add to that burden for many, critics have said.

In her Executive Budget Recommendation, Preckwinkle said she proposed the tax to offset raising any other taxes for the next two years.

The budget also stated the soda tax "is expected to provide $74 million in revenue in FY 17 based on an effective date of July 1, 2017.”

The Illinois Beverage Association’s Claudia Rodriguez, who is the spokesperson for the Cook County Coalition Against Beverage Taxes, said she understands the county is trying new ways of getting revenue, but the tax will burden small businesses.

“At a time when so many are struggling to make ends meet in this community, a tax like this will only put Cook County’s small businesses at a competitive disadvantage.” Rodriguez said.

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