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Ask Chicagoist: Fountain Drink Tax?

By Thales Exoo in Miscellaneous on Mar 22, 2007 6:05PM

Dear Chicagoist,

Is there really a tax on fountain drinks in Chicago? What's the point of that?

Thirsty For Carbonation

2006_03_askfountain.jpgHi Carbonation Junkie,

You bet. The fountain drink tax is how Chicago gets included on those bizarre law lists that you'll invariably get forwarded from someone every few months. They usually involve things like "no whistling on the south side of the street on Wednesday afternoons." Or in our case, "If you buy a fountain soda drink, you'll pay a 9 percent tax. If you buy the same soda in a bottle or a can, you'll only pay 3 percent."

The gist of the law is that fountain drinks are taxed higher by the city than bottles or cans are. In terms of bottles and cans, "The Chicago Home Rule Municipal Soft Drink Occupation Tax" states that soft drinks (nice way to avoid the ever-present "pop" vs. "soda" controversy) are taxed at a rate of 3%. Well, the true wording states that the seller of the drinks has to pay that tax, which of course means that they pass that right along to you when you're thirsty for a can of Pepsi One. Sellers have to file a Chicago Soft Drink Tax Return either monthly, quarterly, or annually (depending on sales). This law explicitly does not include fountain drinks, which they clearly define as being "drinks that are prepared by mixing a syrup or concentrate with water."

The Fountain Soft Drink Tax, on the other hand, taxes "retailers selling fountain soft drinks in the City of Chicago" at 9% of the syrup price. To be exact, according to Chicago Municipal Code, the tax is actually the responsibility of the suppliers of the fountain syrup: "It shall be the duty of every soft drink supplier to collect the tax ... from retailers to whom they sell soft drink syrup or concentrate, and to remit the tax to the city department pursuant." We really just can't get enough of Chicago Municipal Code. Either way, like the other tax, it ends up being passed down the food (er, beverage) chain until the consumers get their fizzy drinks and pay the tax to the retailer.

As for the point of taxing the fountain drinks, we can only assume it's because they can, but we imagine one of our readers might have some more profound insight into tax law?

Chicagoist suggests you forgo all of this and just have some water.

Image via JosephBarillari.

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