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Log In / Register | Nov 19, 2017

U.S. Government Could Withhold $87 Million from Illinois over Soda Tax

The Cook County (where Chicago is located), Illinois soda tax, which went into effect on August 2, is not only facing several lawsuits, but the U.S. Department of Agriculture has weighed in, saying in a letter to the Illinois Department of Human Services that taxing sugary drinks bought through SNAP (the food stamps program) is a violation of federal law. It warned that it could withhold money. Those funds amounted to $87 million last fiscal year.

The tax is one penny per ounce, meaning that a 2-liter bottle of Coke selling for $1.00 carries an additional 68¢ charge.

The U.S. Department of Agriculture is objecting to how the tax is applied to purchases using food stamps, known as the Supplemental Nutrition Assistance Program. It says the county must take “immediate steps” to become compliant, adding no taxes can be collected until the problem is solved.

James T. Dimas, secretary of the Illinois Department of Human Services, informed Cook County Board President Toni Preckwinkle of the issue in a letter this week.

Dimas wrote to Preckwinkle, “FNS states that it will take action to suspend administrative funds to the State of Illinois unless corrective action is taken ($86.8 million last fiscal year). Please be advised that FNS powers against the State in this regard are substantial.”

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