Bottled water tax collects more than $1 million

By Becky Schlikerman

The city’s newly implemented bottled water tax has collected $1.5 million in revenue from January until the end of April, said Department of Revenue spokesman Ed Walsh.

The money collected from the tax goes into the city’s general funds that provide city services, such as trash collection, Walsh said.

Jody Warner / The Chronicle

From January to April, the 5-cent tax on bottled water has collected $1.5 million, according to Ed Walsh, Department of Revenue spokesman.

The goal is to earn $10 million a year or $500,000 a month from the tax, said Alderman George Cardenas (12th Ward), who proposed the tax.

He said the current revenue collected is “roughly where it should be.”

But Walsh said it isn’t known yet whether the city is going to meet its yearly goal because water consumption goes up when the temperature rises. So far the tax has only been collected during the colder months.

“We will have a better snapshot when the summer is over,” Walsh said.

Cardenas said the numbers may not be completely accurate because some stores may not be reporting their revenue accurately or computing the tax properly in the first few months of implementation.

In order to assure the tax is collected, the city conducts audits on businesses to make sure they are enforcing the tax, Cardenas said. Those businesses may get fined if they are not in compliance, he said.

“It’s a matter of all these stores coming into line with what the law says,” Cardenas said.

Although the tax now isn’t allocated to a specific department or function, Cardenas said he hopes that it is one day used specifically for Chicago’s water systems.

“The tax itself has a purpose, and part of the purpose is that we need to invest more in our purifying systems. We have to find a way to pay for that and for recycling,” Cardenas said.

He said he would like to see how much money will be collected this summer before proposing the money be allocated specifically to the water systems.

“There is no doubt the revenue has to be linked to our water [systems],” Cardenas said. “We can’t take money from [bottled water] and not reinvest it [in the water systems].”

However, some groups that have been opposed are challenging the tax in court, claiming it’s unlawful.

The American Beverage Association, the International Bottled Water Association, the Illinois Retail Merchants Association and the Illinois Food Retailers Association have filed a lawsuit against the city of Chicago challenging the law because it allegedly violates some state laws including the “Home Rule Retail Sales Tax Act.” The plaintiffs claim it states a food item that is consumed off the premises from where it was purchased cannot be taxed, according to court documents.

These groups are also alleging that this tax is illegal because it violates state uniformity tax laws because they are not taxing other bottled drinks that are made primarily of water, like juice, said Joe Doss, president of the International Bottled Water Association.

Chicago Department of Law Spokeswoman Jennifer Hoyle said, “We’re confident that the tax is legal in Illinois.”

Right now the case is in discovery, the pre-trial phase in which the parties collect documents from each other and are still pending, Hoyle said.

“Any actions that discourage consumers from drinking bottled water is not in the public interest,” Doss said.

Doss said it also places an unfair burden on those who can least afford it, such as the elderly and people with fixed incomes.

Doss said he also questions where the revenue is going.

“While they claim this was a tax for environmental protection issues, none of that money is earmarked for that purpose,” Doss said.

He said the $1.5 million already collected seems low compared to their yearly goal of $10 million, and this may mean consumers may be purchasing water outside the city or turning away from bottled water.

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