Multi-State – Sugar-Sweetened Beverage Taxes Burden Taxpayers

Bloomberg BNA
by Jonathan A. Feldman and Alla Raykin
August 17, 2017

Tax Policy

To raise revenue and tackle health concerns, a number of localities have imposed sugar-sweetened beverage taxes. However, localities may have limited guidance on how these taxes are administered. In this article, Eversheds Sutherland (US) LLP’s Jonathan A. Feldman and Alla Raykin discuss the compliance burdens local beverage taxes impose.

A Cook County, Illinois, judge recently dismissed a group of retailers’ legal challenge to the County’s Sweetened Beverage Tax. Cook County’s Sweetened Beverage Tax was originally intended to go into effect July 1, but was delayed when a trial court issued a temporary restraining order while it evaluated the legality of the tax. The tax survived the legal challenge despite widespread confusion, limited and inconsistent guidance, and administrative uncertainty. It went into effect August 2. Already, at least three class action suits have been filed in Cook County involving retailers’ attempted compliance with the tax. The implementation of Cook County’s tax, despite all of the identified problems, demonstrates that taxpayers—retailers, distributors and bottlers—cannot rely on courts to stop these taxes, but must be prepared to shoulder the administrative burden.

Sugar-Sweetened Beverage Tax Background

As local governments continue to seek new sources of revenue, various forms of sugar-sweetened beverage (“SSB”) taxes have gained traction nationally. Proponents of these taxes rely on public health studies to show the role of SSBs in the obesity epidemic and the health risks of such beverages, although other sugar-sweetened food, such as candy, has been largely unaffected. However, it is debatable whether the imposition of, and revenue from, such taxes actually accomplish anything towards the purported public health objectives. Or are these taxes simply a general revenue raising mechanism disguised in noble purposes?

For More Information:
Bloomberg BNA
The SALT Report – PA
The SALT Report – IL
The SALT Report – CA