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A state appeals court has rejected Cook County’s attempt to lift a stay on the county’s new so-called soda tax, directing a Cook County judge to proceed with plans to hear arguments on whether enforcement of the tax should be more permanently blocked.
On July 10, a three-justice panel of the Illinois First District Appellate Court in Chicago denied Cook County’s appeal of a temporary restraining order placed by a Cook County judge on the county’s controversial sweetened beverages tax.
The restraining order had come at the request of the Illinois Retail Merchants Association and a group of local grocers, who fear the tax would harm their businesses and consumers, and who have argued the tax should be struck down as unconstitutional and illegal in its current form.
The tax had initially been scheduled to take effect July 1. But on June 30, Cook County Circuit Judge Daniel Kubasiak had put in place the temporary restraining order to allow more time for IRMA and the grocers to make their case against the tax in court.
The continued stay will mean prices for beverages sold by the grocers and other beverage purveyors in Chicago and suburban Cook County will remain unchanged, at least until the courts can rule on whether the county or IRMA will prevail on the legal questions surrounding the county’s ordinance establishing the tax.
In their order denying the county’s appeal of Kubasiak’s TRO, the justices did not offer any explanations for their denial. They merely directed Kubasiak to hold a hearing no later than July 12 on whether the court should impose a preliminary injunction on the tax.
The justices also directed Kubasiak to expedite the hearing and his ruling.
“We appreciate the appellate court’s decision to uphold the TRO, which protects Cook County retailers and consumers against a tax with rules and regulations that are unconstitutional, poorly defined and vague,” said IRMA president and CEO Rob Karr in a prepared statement.
The appellate ruling comes as the latest skirmish in a campaign against the county tax dating back months.
The Cook County Board, at the urging of Cook County Board President Toni Preckwinkle, sought to plug a hole in the county’s annual budget by slapping the special tax on the sale of a variety of sweetened beverages in Chicago and suburban Cook County. The tax would apply particularly to all kinds of soda, including diet soda, as well as sweetened tea and coffee beverages, among a number of other drinks. The tax would apply to those sold in bottles and cans, as well as fountain beverages and other drinks sold in non-pre-measured containers.
Retailers launched a campaign against the tax, asking the county to rescind it, asserting the tax would drive consumers to purchase their drinks out of the county, harming retailers and consumers alike, particularly in the county’s suburbs.
While the county has estimated the tax would bring in $200 million in new tax revenue, retailers and other tax opponents have argued those estimates are overblown, pointing to other jurisdictions, including Philadelphia, where sweetened beverage sales have plunged in response to such a tax.
In their arguments in court, IRMA and the grocers group have also argued the ordinance was written poorly, leaving the businesses attempting to collect the tax at grave risk of running afoul of federal regulations and of being sued, in addition to potentially being fined by the county for not collecting the proper amount of taxes.
And the retailers have argued any such potential costs would come on top of significant sums they’ve already spent and would continue to spend to try to bring their systems into compliance with the county’s tax.
IRMA and the grocers are represented in the action by attorneys with the firm of Horwood Marcus & Berk, of Chicago.