Five days before the sweetened beverage tax was to take affect, the US Department of Agriculture says it advised Cook County the tax violates federal law. Now, the county has 14 days to come up with a corrective plan of action.
This morning the Illinois Department of Human Services in conjunction with USDA, notified Cook County Board President Toni Preckwinckle that portions of the sugary beverage tax were illegal.Specifically, in relation to how the tax affects low-income families. In a letter delivered to the county IDHS and USDA assert that families who take part in the Supplemental Nutrition Assistance Program (SNAP) are exempt from such taxes.
Specifically, in relation to how the tax affects low-income families. In a letter delivered to the county IDHS and USDA assert that families who take part in the Supplemental Nutrition Assistance Program (SNAP) are exempt from such taxes.
“After speaking with USDA on June 27th, the County was not aware that Regulation 2017-3 was unacceptable,” a spokesperson for Preckwinckle said in a statement. “We believed that USDA was taking our regulations under consideration and would communicate back with the County if there was a concern.”
The statement says it was never intended to “put federal SNAP funding for the state in jeopardy.” The board says it will work with the USDA to address the concerns. The penny-per-ounce tax went into affect Aug. 1 and has since been met with a slew of legal challenges including a lawsuit from the Illinois Retail Merchants Association.
“In fact, many moths ago we told the county that what they were offering us as far as how to service the SNAP customer was actually a violation of our contracts with SNAP,” Vice President and General Counsel of IRMA Tanya Triche-Dawood said. “But the county chose not to do anything about that.”
The problem according to IRMA was that the ordinance rolls the tax into the price of the beverage which is then passed on to the consumer. In the case of SNAP customers, that tax was to be refunded in store.
“So, then we have to figure out how to unroll, how to separate that tax from the selling price.” Triche-Dawood said. “and that simply isn’t a viable option.”The USDA says SNAP consumers are specifically exempt under federal law from paying taxes on those purchases.
In addition, the letter warns that if the county doesn’t fix the problem, the state could lose federal funding to the tune of more than $86 million dollars.
“The thought that we might now be in a position, frankly a position we never should have been in in the first place to possibly lose out SNAP contract should make everyone concerned,” Triche-Dawood said.
Source: NBC Chicago