Suing to Stop Chicago’s Bottled Water Tax

By January 2, 2008Taxation

From WLS-TV, Chicago:

One day after it went into effect, Chicago’s tax on bottled water faces a lawsuit.

The city imposed a 5-percent tax [sic] on each bottle of water sold that is expected to bring in more than $10-million in tax revenues every year.

A Coalition of Food and Beverage Retailers said the tax violates a state law prohibiting a tax from being imposed on a single product. The group will file the suit in circuit court Wednesday morning.

Actually, the tax is 5 cents a bottle.

The Tax Foundation’s blog has more details on the lawsuit, including the plaintiffs: the American Beverage Association, the International Bottled Water Association, the Illinois Retail Merchants Association and the Illinois Food Retailers Association. The statute on which the lawsuit is based is presumably 65 ILCS 5/Art. 8 Div. 3: “All taxes levied by a municipality, except special assessments for local improvements, shall be uniform upon all taxable property and persons within the limits of the municipality, and no property shall be exempt therefrom other than such property as may be exempt from taxation under the constitution and general laws of the State.”

There’s great value in uniformity because it discourages taxing bodies from singling out individuals or specific businesses for punishment, otherwise an invitation to corruption and caprice. As the American Beverage Association notes (in this news release), the Chicago tax is the first of its kind in the nation. Best to squelch it now and prevent the precedent.

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