Chi's soda tax not so sweet

Only one other big American city has put a tax on soda and lived to tell the tale - the Windy City.

Many states tax soda, but Chicago is the only big city to do so, with a 3 percent soft-drinks tax levied on retailers since 1994. Chicago also started charging a bottled-water tax of 5 cents per container in 2007.

Mayor Nutter is proposing a tax on retailers of 2 cents per ounce on soda with sugar, much larger than Chicago's levy. Nutter, who says that he needs to fill a projected $150 million budget gap, has argued that the tax would raise revenues and help fight obesity. But opponents say that it will drive business out of the city and cost jobs.

So, as the debate rages, it's worth asking: Has the Windy City tax changed buying patterns or drinking habits?

Peter Scales, a spokesman for the Chicago Office of Budget and Management, said the taxes on soft drinks and bottled water brought in $18 million last year. Scales said he was not aware that the taxes had prompted any major change in the number of beverages bought in the city.

And health experts said that a tax that small on soft drinks would not seriously change consumption patterns, since it adds only a few cents to a can of soda.

"Three percent is way too low to have an impact," said Kelly Brownell, director of the Rudd Center for Food Policy and Obesity.

"We've proposed a penny-per-ounce tax, feeling that is enough to change people's buying habits."

But groups representing merchants and the beverage industry say that some people have shifted to buying soda and water in the suburbs, due to the taxes, which takes a toll on Chicago retailers.

David Vite, president of the Illinois Retail Merchants Association, said the soft-drinks tax makes life harder for businesses in Chicago. Like the Philadelphia proposal, the Chicago soft-drinks tax is charged to merchants as part of their business tax.

"What we see more than anything else is confusion," Vite said. "It adds another burden of collection for retailers. All of these things start to make stores less profitable."

Tim Bramlet, executive director of the Illinois Beverage Association, said that since the bottled-water tax began, more consumers have been buying water in bulk in the suburbs.

"We immediately saw the sales of bottled water switch from city stores to suburban stores," Bramlet said. "In Chicago, you've got higher sales tax inside the city than outside the city, and it's just another nail in the coffin for people trying to do business. We think it's really an arbitrary tax."

Bramlet estimated that 10 percent of bottled-water sales have moved outside the city - a shift that he said mainly hurt retailers.

"The volume remained pretty much the same, but sales picked up in the suburban areas," he said.

Locally, the push back against a soda tax continued yesterday when about 200 people - mostly Teamsters who work for Coca-Cola and Pepsi - protested outside City Hall.