Expert says repeal of Cook County beverage tax a double blessing
Cook County repealed its much-loathed sweetened beverage tax on Wednesday after only two months of enforcement, so it's impossible to know how much revenue it might have generated over a year.
One expert, however, predicted the outcome would have burst the county's bubble.
Scott Drenkard, the director of state projects for the Tax Foundation, said that based on a similar tax in Philadelphia, Chicago would have fallen far short of its projected $200 million boost.
The county board repealed the 1-cent-per-ounce tax by a vote of 15-2. It will cease to be law as of Dec. 1.
Drenkard said that in Philadelphia, where a 1.5-cents-per-ounce tax is in force, sugary beverage sales have fallen by 50 percent, according to some retailers, deeply cutting into expected revenue.
“Once you start peeling back some of the layers of what is being promised and what actually happens, this particular tax shows itself as a very poor way of raising revenue for government services,” Drenkard said a recent "Illinois Rising" radio show.
According to Drenkard, the Philadelphia tax was projected to bring in $46 million in the first six months but fell $7 million short. The revenue is slated to be used for expanding pre-K programs in local schools and as reinvestment in parks and recreation centers.
"... if it [pre-K programming] really was your No. 1 priority, you wouldn’t need a new tax,” Drenkard said. “You would rely on broad-based taxes that have predictable revenue streams.”
While sales for sugary drinks declined in Philadelphia, beer sales increased. Drenkard noted that the sugary drink tax is 24 times the rate charged on beer.
“It has been a boon for the beer industry,” Drenkard said. “We’ve actually seen studies done … and it shows that beer really is a substitute for soda, and if you tax soda at a very high rate, you get lots of households — if they are already alcoholic-consuming households — that will switch to beer.”
Drenkard cautioned that switching from soda to beer can result in a higher caloric intake.