Industry News / Regulatory Compliance / Sweet

Illinois Lawmakers Propose State Tax on Sugar-Sweetened Beverages

By Lauren R. Hartman, Product Development Editor

Jan 20, 2017

A bill in a bipartisan package of tax measures proposed, as a way to break Illinois’ budget impasse, to increase taxes on sugar-sweetened beverages.

The Sugar-Sweetened Beverage Tax Act, introduced by Sen. Toi Hutchinson on Jan. 11, pledges to increase the sales tax on sugar-containing beverages such as juices, tea, coffee and soda drinks, at a rate of one cent per ounce. The tax is projected to increase the cost of these beverages by 50 percent. According to a recent press release by Pepsi Mid-America, a two-liter bottle of soda would cost nearly 70 cents more, a 12-pack of soda could increase by $1.44 and a 12-pack of sweet tea would surge by $2.04 if the bill is passed into law.

For a state heavily burdened with debt, the bill could be seen as a much-needed source of revenue. Last November, an ordinance to impose similar taxes was passed in Cook County. Effective July 1, 2017, the law is expected to generate $224 million per year for the county. 

A sugar tax could help the state out of its financial crisis, and curb disturbing health trends, analysts say. A report released by the State of Obesity in September showed Illinois' adult obesity rate was 30.8 percent in 2015, an increase from 20.4 percent in 2000, and 2.1 percent in 1990.

"Sugary drinks are the number one source of added sugar in the American diet," said Rhonda Andrews, president of the Illinois Association of Public Health Administrators. "Adults who drink one to two servings per day are 26 percent more likely to develop type-2 diabetes than those who drink zero to one per month."
Rob Karr, president of the Illinois Retail Merchants Association, sees the sugar tax measure as damaging to the state’s tax base. "It certainly will set a new standard for bad tax policies," said Karr. "It’s not a reliable tax source. It’s an administrative nightmare and it continues to profit a narrow base when Illinois needs to go in the opposite direction."

Karr said interest groups pushing for the sugar tax proposals have intentions that aren’t in line with the state’s tax regulations. "They are certainly entitled to push forward, but they don’t have the best interests for tax policies in the state of Illinois," he said.