It looks like a proposed penny-an-ounce tax on sugary soft drinks just might be working its way onto the smorgasbord of tax and fee increases served up by Mayor Rahm Emanuel.
Ald. George Cardenas (12th), chairman of the City Council’s Committee on Health and Environmental Protection, said Monday that Emanuel has asked him to hold a hearing on the issue before Sept. 22 when the mayor is scheduled to unveil his 2016 budget.
“The mayor is supportive of my efforts to have the hearing and see the tax approved. He’s supportive of the fact that this makes sense from a health standpoint and from a budgetary standpoint. Taxing soda saves lives. We all agree on that,” Cardenas said.
“It’s not just gobbling up the money and putting it into the corporate fund. It’s financing wellness, education and sports programs that help kids avoid the pitfalls of obesity,” he said. “We’ll be a healthier city for it. This is one of the best decisions that can be made from a health and budgetary standpoint.”
The mayor’s office confirmed that Emanuel has asked Cardenas to hold a hearing, but refused to say whether the tax on sugary soft drinks would be included in the tax package that’s expected to include a massive property tax increase, a first-ever, suburban-style garbage collection fee and a tax on smokeless tobacco products.
“The mayor has been clear that he is listening to all ideas brought to him to address both the structural deficit and the upcoming police and fire pension payment. Gathering information and public input is part of the budget process when it comes to determining which options are viable and which are not,” the mayor’s communications director Kelley Quinn wrote in an email.
“That’s why we have had multiple meetings with aldermen regarding revenue and efficiencies, and [is] having three budget forums to solicit ideas from the public.”
Minutes later, Cardenas called back to say that he had overstated the case.
“The mayor told me, ‘Go do your thing.’ Does that mean he’s supportive of the tax? No. It doesn’t mean that. It means I’m going to try to convince my colleagues this is a good thing,” he said.
Rob Karr, president of the Illinois Retail Merchants Association, said he still hopes to convince the mayor and City Council that the tax will do nothing to curb obesity.
“Chicago has 20 years of experience with a 9 percent tax on fountain soft drinks and a 3 percent soft drink tax on cans and bottles. During that same time period, obesity has increased. They can’t pin the blame on sugar when obesity is up and sugar consumption is down,” said Karr, co-chairman of the Chicago Coalition Against Beverage Taxes.
“It’s discriminating against a single product and putting the blame where it doesn’t belong,” he said. “Kids are a whole lot less active than they used to be.”
Karr argued that a sugar tax would drive consumers to the suburbs where they already go to buy cigarettes and gasoline.
“Chicago is not an economic island. There are lots of places for consumers to get the products they want. And they’re within very easy driving distance,” Karr said.
“If it shifts sales and costs retailers more to obtain product, it could cost jobs. But that’s not the main argument,” he said. “The main argument is it’ll cost consumers.”
Sam Toia, the former owner of Leona’s Restaurants now serving as president and CEO of the Illinois Restaurant Association, argued that adding a third Chicago tax on soft drinks would have “disastrous unintended consequences” for both consumers and businesses.
“We don’t need another tax that’s going to nickel-and-dime restaurants out of business. It will cause higher prices at neighborhood grocers and retailers and job losses across several industries,” Toia said.
Toia noted that the beverage industry has already cut the total calories of beverages shipped to school by 88 percent.
Cardenas has billed the sugar 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.
It comes at a time when CPS has already made $200 million in budget cuts that include coaching stipends for elementary school sports and warned of more drastic cuts in mid-school year if CPS doesn’t get $480 million in pension help from Springfield.
If Emanuel decides to get behind the sugar tax, it will mark a dramatic turnaround.
For four years, the mayor has steered clear of taxes, bans and other punitive measures.
Instead, he has pressured the Coca-Cola Co. to bankroll health, wellness and recycling programs in Chicago that promote what the mayor likes to call “personal responsibility.”
In 2011, Coca-Cola and other beverage giants offered Chicago a $5 million carrot for a wellness competition between city employees and San Antonio — along with calorie counts on vending machines — to avoid the stick: a tax on sugary beverages or a New York-style ban on oversized beverages.
One month later, Cola-Cola agreed to bankroll a Chicago Park District program to offer nutrition education and exercise classes run by U.S. veterans to combat obesity and diabetes.
The next year, Coca-Cola and its philanthropic foundation gave Chicago an Earth Day gift of $2.6 million — enough to buy 50,000 blue carts over the next five years. In exchange for the $2.6 million grant, images of Coke products appeared on the 50,000 blue carts to show Chicago homeowners what items need to be recycled.
“I believe firmly in personal responsibility,” Emanuel told reporters at the time. “I believe in competition, and I believe in cash rewards for people that actually make progress in managing their health care.”
Three years ago, Cardenas held a marathon public hearing on the so-called “Sweetened Beverage Tax,” then dropped the idea like a hot potato, in part, because Emanuel preferred the carrot to the stick.
At the hearing, health advocates and retailers squared off over the wisdom of imposing a tax on soda pop, energy drinks and other sugary beverages to follow the lead of 33 states that already impose a sales tax on sugary beverages. At the time, six other states added excise taxes as well as a sales tax.
Retailers fighting the plan said they were already hurting from the city’s imposition of a Cardenas-championed tax on bottled water. They cited a federal study that showed a 12 percent reduction in consumption for every 10 percent increase in taxes on sugary drinks. That would reduce sales, production and jobs, he said.
Health experts countered that one-third of U.S. children are overweight, in part because they consume too many sugary drinks.