Sunday, January 6, 2008

City sued over bottled water tax

It was bound to happen wasn't it? I'm sure there were many people who stocked up on bottled water so that they won't pay the tax this year. Now someone is suing over it. From the Sun-Times...

Chicago's five-day-old, 5-cent tax on bottled water is headed to court after four industry groups sued the city Friday, claiming the tax is illegal under state law.

The lawsuit had been threatened after the City Council passed the first-in-the-nation tax in November. It went into effect Jan. 1, slapping a nickel on every bottle of water sold in the city. It's expected to raise $10.5 million this year.

The lawsuit, filed in Cook County Circuit Court, asks that the tax be thrown out because it intentionally circumvents the state law that forbids home rule municipalities from taxing food that's to be consumed off premises.

The suit also argues that, while the city is legally allowed to tax carbonated soft drinks, water is not a soft drink and should therefore be treated the same as bottled beverages such as milk, tea and sports drinks, which are not subject to the 5-cent tax.

Joe Doss, president of the International Bottled Water Association, a plaintiff, said the tax is a bad idea on many fronts. "It seems like this is a penalty for people making smart beverage choices," Doss said.

Also joining in the suit is the Illinois Retail Merchants Association, the Illinois Food Retailers Association and the American Beverage Association.
The city is sticking to its guns however...
"We have reviewed the legal issues," said Law Department spokeswoman Jenny Hoyle. "We believe this tax is legal and are prepared to defend it in court."

Hoyle disputed the contention that state law bars the tax, saying the law preempts percentage-based taxes on foods, not per-unit taxes such as the per-bottle tax.

As for the argument that bottled water needs to be taxed equally with other non-carbonated drinks, Hoyle said water has a "very significant" difference from bottled teas, coffees and sports drinks.

"Unlike these other beverages, tap water is a generally available, safe alternative in the city of Chicago," she said. "That provides a reasonable difference that distinguishes bottled water from these other beverages."
Now the reasoning for taxing bottled water is for the environment. Or more accurately to cut down on plastic waste. Though to that end this tax could just be seen not as an enviromental tax, but just a convenient way to raise revenue thru a convenient target. Though to be sure people do tend to throw their bottles everywhere that upsets me but how this tax is suppose to cut down on that is beyond me!

At the same time opponents will argue that city stores will lose out to suburban stores. People will go to the burbs to buy bottled water. That may be true.

There is one concern. Let's say you buy one bottled water and you rightfully get taxed for that. What about those people who buy these bottled water packs. Might they get taxed per bottle in that pack or per pack. I don't think that's been explained at all!

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