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According to a warning letter from the U.S. Department of Agriculture (USDA), the sugar-sweetened beverage (SSB) tax that took effect in the Chicago metropolitan area on August 2, 2017, violates the federal Food and Nutrition Act, putting Illinois at risk of losing its food-stamp funds. Some retailers could not update point-of-sale systems to exempt SSB purchases made with Supplemental Nutrition Assistance Program (SNAP) funds before the tax went into effect, so Cook County Department of Revenue officials told retailers they could refund the taxes at a customer service desk or other location on the premises. However, USDA told the Illinois Department of Human Services (IDHS) in an August 7 letter that retailers cannot charge tax to SNAP recipients at any time and that providing an immediate refund does not cure the violation of federal law. USDA also stated that it notified Cook County officials that the workaround was “unacceptable” as…

A sugar-sweetened beverage (SSB) tax will go into effect in Chicago and surrounding suburbs following a Cook County court's dissolution of a temporary restraining order and dismissal of the Illinois Retail Merchants Association's lawsuit alleging the tax violated the state’s constitution. Illinois Retail Merchs. Ass’n v. Cook Cty. Dep’t of Revenue, No. 2017L050596 (Ill. Cir. Ct., Cook Cty., order entered June 28, 2017). The 1-cent-per-ounce tax was scheduled to take effect July 1, 2017, but its implementation was postponed by the restraining order, which was upheld by the state appeals court. More details about the tax appear in Issues 622 and 640 of this Update. See Chicago Tribune, July 28, 2017.   Issue 642

The Illinois Appellate Court has upheld a temporary restraining order that stopped a proposed one-cent per-ounce tax on sugar-sweetened beverages (SSBs) from going into effect in Cook County on July 1, 2017. Illinois Retail Merchs. Ass’n v. Cook Cty. Dep’t of Revenue, No. 2017L050596 (Ill. Cir. Ct., Cook Cty., filed June 27, 2017). The Illinois Retail Merchants Association filed for the order along with preliminary and permanent injunctions against imposition of the tax, arguing it violates the uniformity clause of the state constitution and is unconstitutionally vague. The plaintiffs allege that the tax applies to distributors and retailers who sell bottled sweetened beverages and syrups or powders used to produce SSBs but not to SSBs prepared by hand, such as those made by baristas, even if they contain more sugar than a comparable bottled or “pre-made” product.   Issue 640

A Pennsylvania appeals court has upheld Philadelphia’s tax on the distribution of sugar-­sweetened beverages (SSBs), rejecting arguments that it is a duplicate sales tax or is preempted by state tax laws. Williams v. City of Philadelphia, Nos. 2077, 2078 (Pa. Commonwealth Ct., order entered June 14, 2017). The court held that the subject matter of the tax—the non-­retail distribution of SSBs—is “distinct” from the sales tax collected when the beverages are sold to a retail purchaser, and thus the distribution tax is not duplicative of an existing tax. In addition, the court said, the tax is not preempted under state law because Pennsylvania cities have the right to tax transactions that are not already subject to state tax or license fees. Nor is it preempted by the federal Food Stamp Act or related tax laws because the tax is levied on the distributors of SSBs and “no recipient of program…

The Seattle City Council has approved a tax on distributors of sugar­-sweetened beverages (SSBs) proposed by the city’s mayor. SSBs covered by the tax include sports, fruit, energy and soft drinks as well as flavored syrups commonly used in coffee drinks. Baby formula, medications, weight-­loss drinks, fruit juice and diet soft drinks are exempt from the tax. See Seattle Times, June 5, 2017.   Issue 637

Voters in Santa Fe, New Mexico, rejected a sugar­-sweetened beverage (SSB) tax initiative that would have raised the price of SSBs by 2 cents per ounce. Political action committees, industry groups and advocacy organizations reportedly spent $3.25 million on the vote. Campaign finance reports show that Michael Bloomberg, who began his campaign for SSB taxes and portion caps during his term as mayor of New York City, contributed $1 million to a pro­-tax committee.   Issue 633

A Massachusetts house bill proposing a one-­ and two-­cent tax per fluid ounce of sugar-­sweetened beverages (SSBs) has been withdrawn during a state budget hearing. The tax would have applied to SSBs containing more than five grams of sugar but excluded 100­-percent juice, milk substitutes, infant formula and beverages for medicinal use. Although sponsor Kay Khan (D) withdrew the proposal, a spokesperson for her office told Bloomberg that she has filed legislation to pursue the tax. See Bloomberg BNA, April 25, 2017.   Issue 632

Four cities and one county have reportedly passed taxes on sugar-sweetened beverages (SSBs), joining Berkeley, California, and Philadelphia, Pennsylvania, in adopting measures purportedly designed to curb sugary-drink consumption. According to media sources, voters in Boulder, Colorado, passed a 2-cent-per-ounce excise tax on SSB distributors, while those in San Francisco, Oakland and Albany, California, passed a 1-cent-per-ounce levy on distributors. In Cook County, Illinois, the board of commissioners also voted in favor of a 1-cent-per-ounce SSB tax. “The tide has turned on this issue, and momentum has swung in our favor,” said Howard Wolfson, senior advisor to former New York City Mayor Michael Bloomberg. “I am confident in the months ahead more municipalities will seek to implement soda taxes to help their citizens, and we will be willing to help them as they do.” See The New York Times, November 9, 2016; Crain’s Chicago Business, November 10, 2016.   Issue 622

The Pennsylvania Supreme Court has denied an application for extraordinary relief filed by several industry groups in an effort to prevent Philadelphia’s 1.5-cent-per-ounce tax on sugar-sweetened beverages (SSBs) from taking effect on January 1, 2017. Williams v. City of Philadelphia, No. 160901452 (Ct. C.P., Philadelphia Cty., order entered November 2, 2016). The one-page order does not provide any reasoning for the decision. The lower court currently presiding over the case has indicated that it will rule on the tax’s legality before the January 1 enforcement date. See The Philadelphia Inquirer, November 2, 2016. Details about the industry lawsuit appear in Issue 617 of this Update.   Issue 621

The World Health Organization (WHO) has published an October 2016 report claiming that “taxing sugary drinks can lower consumption and reduce obesity, type 2 diabetes and tooth decay,” according to a concurrent press release. Titled Fiscal Policies for Diet and Prevention of Noncommunicable Diseases (NCDs), the report collates information gathered during a May 2015 technical meeting of fiscal-policy experts who evidently concluded that “there is reasonable and increasing evidence that appropriately designed taxes on sugar-sweetened beverages would result in proportional reductions in consumption, especially if aimed at raising the retail price by 20% or more.” The report summarizes the effect of fiscal policies—including food and beverage taxes, nutrient-focused taxes and subsidies—on health outcomes in Denmark, Ecuador, Egypt, Finland, France, Hungary, Mauritius, Mexico, Philippines, Thailand and the United States. “Some of the challenges faced in implementation include a lack of appropriate capacity for tax administration, tax set at low levels that…

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