Cook County Soda Tax Repealed After Only Two Months in Effect | Citizens Against Government Waste

Cook County Soda Tax Repealed After Only Two Months in Effect

The WasteWatcher

When politicians decide to tax something new, taxpayers rarely see the end of it.  This adage is especially true of so-called “sin taxes,” levies on products like alcohol, tobacco, and, increasingly, soda.  Those in government always appreciate more money, and politicians like beating up on unpopular industries.  It’s a two-pronged argument:  you shouldn’t be buying too many alcoholic beverages, cigarettes, sugary drinks, and the like; and besides, the government needs more revenue anyway. 

The economic case for sin taxes is dubious, because the government will receive more revenue if people buy more of the products the government supposedly wants them to stop purchasing.  If the people are deterred from spending money on vices, the government gets less money.  For example, as more people stop smoking, revenue from tobacco taxes dries up.  The problem becomes evident when officeholders addicted to that funding stream impose a tax on something else to compensate, and the cycle of new taxes and tax increases continues. 

As a gimmick for politicians, sin taxes represent a highly volatile and unpredictable source of revenue.  Jurisdictions that impose them lose business to their neighbors and almost never are revenue projections from sin taxes met.  These taxes are sharply regressive and exacerbate inequality; even those who argue for a bigger government, such as Sen. Bernie Sanders (I-Vt.), have spoken out against them for this reason.  Still, politicians desperate for cash are easily tempted by bad ideas.

The rationale used to advocate for sugary beverage taxes is particularly disingenuous and depends on the audience:  proponents lobbying lawmakers behind closed doors can point to the increased revenue that will temporarily bail them out of having to make tough budgeting decisions; if the tax is being put before voters in a ballot initiative, the promise of healthier children is difficult to resist.

All of this is why what has happened over the last year in Cook County, Ill., the nation’s second most-populous, is so important.  Thanks to the efforts of ordinary citizens, taxpayers there will see the end of the county’s soda tax just a few months after it was implemented. 

On November 10, 2016, the Cook County Board of Commissioners, voting 9-8, passed a penny-per-ounce tax on sugary and artificially sweetened beverages, bringing this bad idea to its largest population center yet.  Board President Toni Preckwinkle viewed the tax as a way to raise “important revenue” and plug the County’s gaping deficit.  The movement to impose the soda tax in Cook County was not homegrown, but rather was bankrolled by sin tax advocate and former New York City Mayor Michael Bloomberg.  For Cook County residents who lived in Chicago, the total tax was much higher than a penny an ounce, as Chicago itself already taxes these beverages. 

The Cook County tax was set to go into effect on July 1, 2017.  After a legal challenge, it became effective on August 2 and was immediately met with a huge outcry.  Revenue was nowhere near expectations.  Within two weeks, the Chicago Tribune was calling for a repeal.  On October 11, the Board of Commissioners voted overwhelmingly, 15-2, to repeal the dreadfully unpopular beverage tax.  Seven Commissioners switched their votes. 

This moment is a major victory for anyone concerned about unending tax increases, government overreach, and fiscal mismanagement by local politicians.  It proves that when enough taxpayers get fed up, a tax can die a quick death.  The Cook County soda tax repeal will become effective December 1, 2017, eleven months before the Commissioners face the voters. 

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