Cook County beverage tax angers retailers

CHICAGO, IL – The Asian American Store Owners’ Association (AASOA) and the Illinois Beverage Association organized a protest against Cook County’s move to impose sweetened beverage tax in Chicago and its surroundings from July 1.

More than 600 people, including Seven Eleven and other retailers, joined the demonstration at James R Thompson building on Randolph St. Chicago, on June 27.

The law was passed last November by the Cook County Board of Commissioners with eight out of 16 commissioners voting for it citing health reasons and, with the president backing the move, it was okayed with majority.

It applies to all bottled sweetened beverages, including soda, sports drinks and energy drinks.

Stores owners say the penny-per-ounce beverage tax will ruin the businesses of 20,000 retailers.

Nirav Patel, president of AASOA, Midwest said the ‘unethical’ tax would not only hit businesses below the belt but would also mean an extra monthly burden of $30, thus impacting the lower-middle class citizens.

Ken Patel from 7-11 says the merchants’ profit margins are already very low and now the extra tax will kill their businesses, and this may lead to exodus of hundreds of small businessmen.

Joy Shah from AASOA says the Board had taken the decision without seeking public opinion and hence has demanded repeal of the ‘unconstitutional’ tax.

“We will express our anger in elections by not voting for those commissioners who supported the tax hike”, he said.

Bharat Thakkar from AARA said the Cook County president did not even bother to come and accept the retailers’ petitions and instead sent his subordinate to collect the petition boxes.

Apart from Ken Patel (Ketan) of 7-Eleven, FOAC president, others who actively participated in the protest program included FOAC board members Kaushik Patel, Bhupender Bawa and Jaymin Pandya as well as Mihir Parikh, Biren Patel and Jaynish Patel of 7-Eleven.

Meanwhile, a group of retailers has sued Cook County, Illinois, to try to block the sweetened beverage tax, arguing it is unconstitutional and too vague for stores to implement.

As part of the Cook County Circuit Court lawsuit, the Illinois Retail Merchants Association is seeking an injunction preventing enforcement of the law and a declaration that it is invalid.

"This ordinance is incomplete and it’s a perfect example of the disaster that awaits when policies are hurried through without serious thought to how they might impact the businesses that have to try to comply with these policies," Jaynish Patel said.

A spokesperson for Cook County board president, Toni Preckwinkle, says she will fight it “vigorously.”

Kaushik Patel said that a packaged sweetened ice tea would be subject to the tax, while a similar drink served from behind the counter would not, the complaint said.

Bhupender Bawa said the tax also makes retailers vulnerable to becoming ineligible for the federal Supplemental Nutrition Assistance Program, because the program prohibits purchasing food that has a state or local sales tax.

Other parties suing the county include Berkot Super Foods, Fairplay Foods, Chiquita Food Market, Leamington Foods, Tony’s Fresh Market, Valli Produce and Walt’s Food Centers.

“It doesn’t give guidance of how people in practice are supposed to enforce this tax ordinance,” said Biren Patel.

“There’s a lot of confusion. And we’re seeing that by the county reacting in the last month, making significant — if not 180-degree changes — to how realtors are supposed to enforce the tax.”

The suit argues, among other things, that there would be a double standard when it comes to imposing taxes on soda and some other sweetened beverages.

That tax covers carbonated soft drinks, whether sweetened with sugar or a substitute such as aspartame. It also covers sports drinks and energy drinks. Fruit drinks will be taxed, too — but 100 percent fruit juice drinks are exempt.

Because some sweetened drinks are taxable and others aren’t, imposition of the tax fails to live up to the stated goal, according to the suit, which is to “promote public health and reduce obesity rates.”
Collecting these “unconstitutional” taxes could also open retailers up to lawsuits, Jaymin Pandya said.

“We’re putting our retailers in a horrible situation where it’s a no-win situation,” Mihir Parikh said. “What we really want to do is take a step back, try to analyze this tax, come up with solutions — and a July 1 date just isn’t going to work for us.”