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Chicago businesses seek to block ‘fat tax’ on sugary drinks

More than 1,000 small- and medium-sized businesses are mobilizing to block a proposed penny-an-ounce “fat tax” on sugary soft drinks they claim would kill jobs and do nothing to curb obesity.

Sam Toia, president and CEO of the Illinois Restaurant Association, denounced the sugar tax championed by the chairman of the Chicago City Council’s Health Committee. Toia called it regressive and the tax equivalent of triple jeopardy.

That’s because Chicago already levies two taxes on soda pop. They include a 9 percent “fountain drink” tax on syrup and a 3 percent “soft drink” tax on cans and bottles.

The penny-an-ounce tax proposed by Ald. George Cardenas (12th) would be strike three. It would apply to syrup and powders as well as canned and bottled drinks, including juices, teas and sodas.

“Adding a third tax on these products will have disastrous, unintended consequences, including higher prices at neighborhood grocery stores and job losses across several industries,” Toia was quoted as saying in a news release.

Ald. George Cardenas has resurrected the idea of a tax on sugary drinks as a way to fund CPS wellness programs while also helping city finances. | Sun-Times File Photo

Ald. George Cardenas has resurrected the idea of a tax on sugary drinks as a way to fund CPS wellness programs while also helping city finances. | Sun-Times File Photo

“Chicago restaurants and small businesses, like consumers, are once again starting to thrive after experiencing one of the worst economic downturns in our nation’s history. The last thing we need is to implement discriminatory policies that will slow growth, drive business out of the city and force businesses to raise prices where it hurts the most: in Chicago families’ wallets.”

The new business group, called the Chicago Coalition Against Beverage Taxes, is being co-chaired by Rob Karr, president of the Illinois Retail Merchants Association, and John Coli, president of Teamsters Joint Council 25, which represents unionized beverage delivery and warehouse employees.

In the 2011 mayoral campaign, Coli provided early and pivotal support for Rahm Emanuel. Most other union leaders either took a pass or endorsed vanquished challenger Gery Chico.

“There are 1,400 union employees in Chicago whose livelihoods are directly or indirectly dependent upon the non-alcoholic beverage industry. Additionally, there are nearly 40,000 small business owners and their hard-working employees who could face layoffs should our aldermen add another tax to the cost of these products. Our union stands strongly opposed to this hurtful tax,” Coli was quoted as saying.

Omar Duque serves as president and CEO of the Illinois Hispanic Chamber of Commerce, whose members employ more than 50,000 Chicagoans.

“The regressive beverage tax being proposed by the Chicago City Council will hit many of these minority-owned businesses and their hard-working employees right where it hurts: their bottom lines,” Duque was quoted as saying.

“My members already face enough headwinds while striving to build and maintain successful businesses and meet payroll for their employees. The last thing they need is the government piling on with another job-killing tax.”

Cardenas has billed the fat tax as a vehicle to bankroll school fitness programs and raise $134 million a year to chip away at a combined $30 billion pension crisis at the city and Chicago Public Schools that has saddled both with junk-bond status.

The alderman said he’s not at all surprised that the opposition is mobilizing.

“I knew they would come out with guns blazing. It’s not the first time. But maybe this time is different because there’s more data and more push from health and economic experts that this is hurtful to the economy,” Cardenas said.

“They say this is a hurtful tax. It’s not. It’s a health tax. Six billion dollars in Illinois alone goes to obesity and diabetes-[related] ailments. Beverage companies  disproportionately target blacks and Hispanics. Their marketing dollars go towards getting kids hooked. If people look at the data and are really concerned for the health of kids, they should act on this and not be deterred by fear mongering. ”

Illinois Beverage Association Executive Director Jim Soreng countered that West Virginia and Arkansas already have an “excise tax on soft drinks” and still rank among the 10 most obese states in the nation. Colorado and Vermont have no sugar tax and rank among the leanest states, he said.

“Taxing soda won’t end obesity. We believe that it comes down to nutritional education, balancing calories from all sources and activity,” Soreng wrote in an email to the Chicago Sun-Times that noted soda and fruit drinks account for only 6 percent of the average American’s daily calories.

Beverage giants hope to reduce per-capita beverage calorie consumption by 20 percent over the next decade by increasing consumer awareness, educating teens about healthy choices and by expanding the availability of no- and lower calorie beverages, Soreng said.

“Our companies will work aggressively to reach this goal by taking real, measurable steps to encourage people to modify their choices voluntarily — not by forcing people to pay more or denying them the freedom to make choices that are right for them,” Soreng wrote.

The Cardenas ordinance would create a “Chicago Wellness Fund” with 75 percent of the tax proceeds used to help CPS in a variety of ways that improve school and “early childhood health and wellness.”

Possibilities include “increased physical activity and physical education, increased nutrition education, improved health, mental health, oral health and social services in schools and home economics courses” that teach students cooking and healthy grocery shopping.

The Wellness Fund could also be used to support “community nutrition and access to healthy foods and nutrition education” initiatives to get healthy food into vending machines and support “physical activity” across the city, including walking and biking.

Cardenas argued once again that it’s time to hit people where it hurts — in the wallet — to discourage them from guzzling high-calorie drinks that pack on the pounds.