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Inside Cook County’s Disastrous Soda Tax Rollout ⋆ Epeak . Independent news and blogs

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The implementation of a soda tax in Cook County, Illinois, has gotten off to a disastrous start.

The cash-strapped county, which includes the city of Chicago, voted in November 2016 to implement the one-cent-per-ounce soda tax to help balance its budget and put the county on “stable financial footing for the next three fiscal years,” according to Cook County Commission President Toni Preckwinkle.

However, when the commission voted to approve the soda tax, it didn’t anticipate that a combination of Illinois state law and federal law would prevent the roughly 873,000 Cook County residents on food stamps from being subject to the tax.

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Preckwinkle had projected the soda tax would generate $74 million in revenue during its first full year in effect. But that projection included the roughly 873,000 county residents on the federal Supplemental Nutritional Assistance Program (SNAP).

At the root of the issue is a federal law that prohibits sales tax from being applied to any transaction paid for with SNAP benefits.

To work around this federal restriction, the county proposed that it would receive the soda tax revenue directly from the sellers, who would then forward that cost directly into the final retail price of the product, out of sight from the consumer.

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However, the Cook County Revenue Department pointed out in early June that the plan is dead on arrival because Illinois sales tax would be applied to the final cost of the already-taxed soda.

In other words, it would be a tax on a tax, which is illegal in Illinois.

As a result, the county was forced to make the soda tax a line item at the point of sale, an arrangement that prevents the roughly 873,000 county SNAP recipients from being subject to it.

The Chicagoland Chamber of Commerce summed up the botched soda tax rollout as “a mess” and urged the county to delay its implementation until Jan. 1.

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Cook County officials are in a conundrum. At the moment, there appears to be no way for the county to legally charge the soda tax to the county’s SNAP recipients.

Moreover, Ivan Samstein, Cook County’s chief financial officer, has yet to explain what effect the SNAP exemption on the soda tax will have on the county’s revenue projections.

Due to a two-and-a-half-year budget gridlock between the Democratic state legislature and the Republican governor, many Illinois counties have resorted to raising sales taxes to balance their budgets.

Cook County already raised its sales tax a full percentage point in 2015 to help balance its budget, but it wasn’t enough.

The county hoped the soda tax would bring enough revenue to prevent a deficit, but now that almost one million residents are exempt from the tax, the county is facing significant layoffs for public safety officials, courtroom staff, public defenders and state’s attorneys.

In addition, some are questioning whether it’s fair for certain residents to be subject to a sales tax, while others — in this case food stamp recipients — are not.

Legal Insurrection’s Mary Chastain analyzed the situation, saying that “the law is not fair.”

“If the law cannot be applied to everyone then why bother having it?” she asked.

What do you think? Scroll down to comment below.

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