The Sweetened Beverage Tax in Cook County, Illinois: Lessons From a Failed Effort

Abstract

Objectives. To describe the public health and policy lessons learned from the failure of the Cook County, Illinois, Sweetened Beverage Tax (SBT).

Methods. This retrospective, mixed-methods, qualitative study involved key informant (KI) and discussion group interviews and document analysis including news media, court documents, testimony, letters, and press releases. Two coders used Atlas.ti v.8A to analyze 321 documents (from September 2016 through December 2017) and 6 KI and discussion group transcripts (from December 2017 through August 2018).

Results. Key lessons were (1) the SBT process needed to be treated as a political campaign, (2) there was inconsistent messaging regarding the tax purpose (i.e., revenue vs public health), (3) it was important to understand the local context and constraints, (4) there was implementation confusion, and (5) the media influenced an antitax backlash.

Conclusions. The experience with the implementation and repeal of the Cook County SBT provides important lessons for future beverage tax efforts.

Public Health Implications. Beverage taxation efforts need to be treated as political campaigns requiring strong coalitions, clear messaging, substantial resources, and work within the local context.

On November 10, 2016, the Cook County, Illinois, Board of Commissioners (“Board”) passed a Sweetened Beverage Tax (SBT) ordinance. The tax was implemented on August 2, 2017, and later repealed, effective November 30, 2017. The ordinance imposed a 1.00-cent-per-ounce tax on the retail sale of sweetened beverages in Cook County¹ (the second most populous US county²). Taxable beverages included sugar-sweetened beverages (SSBs) and artificially sweetened beverages (ASBs) such as soda, sweetened teas and coffees, and energy, sports, and fruit drinks. Nontaxable beverages included 100% juices, milk or milk substitutes, and unsweetened beverages to which purchasers can add or request added sugar at the point of sale.³

Evidence shows that the Cook County SBT was fully passed through to consumers through higher prices, with a slight overshifting of the tax with taxable beverage prices increasing by about 1.14 to 1.19 cents per ounce.^4,5 In addition, high food store compliance with the SBT occurred (91% overall compliance), with the biggest challenge being the tax application of juice drinks (only 71.4% correctly taxed).⁶ And, during the 4 months that the tax was in effect, it raised $61 576 501 in revenue.⁷

Cobenefits of beverage taxes include revenue generation and reduced consumption of sugary drinks. Evidence of the actual impacts of beverage taxes on purchasing, consumption, and sales (e.g., from Berkeley, CA; Philadelphia, PA; and Mexico) continues to emerge.^8–16 In addition, qualitative studies have examined the factors influencing beverage tax adoption, framing, and implementation^17–20; media and news perspectives on beverage taxes^21–25; and perceptions about beverage taxes.²⁶ And, authoritative bodies including the National Academies and the World Health Organization have called for fiscal policies (i.e., taxes) as a key strategy for reducing SSB consumption.^27–29 There also have been calls for more research on the SSB policy process (including policy development through implementation).^30,31 To our knowledge, no study has qualitatively examined the lessons learned—from adoption through implementation (and repeal in Cook County)—of a beverage tax. With this study, we sought to fill this gap by telling the “story” of a beverage tax implementation failure to help inform public health advocates and decision-makers with future beverage tax efforts.

METHODS

This was a retrospective, mixed-methods, qualitative research study involving key informant (KI) interviews and document content analysis. We conducted semistructured interviews with 5 protax public health agencies and advocacy groups, a prominent Board member opposed to the tax, and a discussion group (n = 8) of leaders from the Board president’s office (Appendix A, available as a supplement to the online version of this article at http://www.ajph.org, contains the interview guides). The primary opposition group, the Illinois Retail Merchants Association, declined an interview but referred us to publicly available court filings and news media for their position; thus, we captured their positions through the document analysis. We conducted interviews between December 2017 and August 2018; the interviews were audio-recorded, de-identified, and professionally transcribed.

We compiled documents published between September 2016 and December 2017 from news sources, court filings, letters, press releases, and testimony. We obtained news media through searches of major Chicago and Cook County newspapers (e.g., Chicago Tribune) and through NexisUni, NewsBank, and Proquest databases. Search strings from September 2016 to December 2017 included “tax!” AND “Cook County” AND “beverage.” We obtained court-related documents from the county clerk’s office. We obtained testimony and Board-related documents from the Board Web site and advocacy materials and letters from the interviews. In total, 327 of the 340 documents obtained were relevant (321 documents and 6 transcripts).

We uploaded all documents into Atlas.ti v.8 (ATLAS.ti Scientific Software Development GmbH, Berlin, Germany) for qualitative coding and analysis. A coding guide, grounded in implementation science theory,³² included a priori codes from the interview guides and emergent themes that arose during initial transcript readings and 5% of the documents. Two study authors conducted 3 reliability coding rounds to achieve greater than 90% intercoder agreement. We divided the remaining documents for coding, with the lead author rereviewing all coded documents upon completion to ensure coding consistency. The coding guide is included in Appendix B (available as a supplement to the online version of this article at http://www.ajph.org).

RESULTS

Figure 1 illustrates the timeline for the SBT, from proposal through repeal. In spring 2016, as the County president’s office prepared for the fiscal year 2017 budget, they sought to identify potential revenue sources to help fill an expected $200-million budget gap. The SBT was identified as a possible revenue source that would also help improve the County population’s health. In late August to mid-September 2016, the president’s office contacted key advocacy groups including the American Heart Association (AHA) and the Illinois Public Health Institute (IPHI) who were leading national (AHA) and statewide (AHA and IPHI) beverage tax campaigns, to seek their support. On November 10, 2016, the SBT ordinance was passed. The ordinance was effective March 1, 2017, with the tax scheduled to take effect on July 1, 2017.¹ Between March and July 2017 (inclusive), the president’s office issued 5 regulations³ and a legal battle ensued in the Circuit Court of Cook County (which the County ultimately won).^33–38 The SBT took effect on August 2, 2017; was repealed on October 11, 2017; and expired effective November 30, 2017.³⁹

FIGURE 1—

Timeline of the Cook County, Illinois, Sweetened Beverage Tax

Note. DOR = Department of Revenue; IDHS = Illinois Department of Human Services; SBT = Sweetened Beverage Tax; SNAP =  Supplemental Nutrition Assistance Program; USDA = US Department of Agriculture.

There were 5 primary categories of lessons learned from the Cook County beverage tax experience as described in the following paragraphs. Because of space constraints, illustrative quotes for most themes are provided in Appendix C (available as a supplement to the online version of this article at http://www.ajph.org).

Beverage Tax Campaigns as Political Campaigns

The advocate KIs and the news media were clear—this was a political “battle” more than a public health campaign—but the rollout of the tax proposal through to the repeal vote was not treated as a political campaign by the president’s office and protax supporters. Some of the biggest challenges faced by the advocacy community included the lack of preparation time to mobilize grassroots support and the lack of a broad protax coalition of supporters to counter the industry-backed antitax coalition.

Lack of time to prepare.

Multiple advocates indicated that they were first contacted by the president’s office about 2 to 3 months before the vote on the tax to seek their and their partners’ support (Figure 1). Advocates were provided a draft approximately 3 to 4 weeks before the vote and were given little opportunity to comment. This provided them with a little more than 90 days to form a coalition and a ground campaign, but they needed a much longer time horizon (6 months to 1 year) “to soften the ground [with public education and coalition building] before you go hard political. But you can’t be softening the ground and dodging bullets at the same time” (KI 3). However, the president’s office also faced a challenge: “a balance between . . . letting a whole lot of time and opposition to build up . . . if they announced it earlier than they did. And they were worried about that” (KI 1).

Industry-backed antitax coalition versus protax public health coalition.

The antitax coalition had a concerted message and extensive resources and was able to mobilize quickly. As the box on page 1012 illustrates, the opposition included the American Beverage Association, the Illinois Beverage Association, and major beverage manufacturers as well as restaurant, retail, and service associations, including the Illinois Retail Merchants Association. In addition, 2 sizeable American Beverage Association–backed opposition coalitions formed before or during the course of the SBT timeline. The Can the Tax Coalition included community members, businesses, and community organizations formed to oppose the tax. The We Deliver in Chicago coalition, formed in 2013, included a “coalition of more than 1,000 community groups, small businesses, labor unions and chambers of commerce.”⁴⁰ The beverage industry and the Can the Tax Coalition poured millions of dollars into aggressive antitax radio, television, and print advertising; their primary argument related to overtaxation in the County, the impact of the tax on local businesses, and the impact on consumers’ pocketbook. They also launched a massive grassroots campaign, paying residents in target districts $11 per hour to circulate antitax petitions, and they hired powerful lobbyists to lobby commissioners that had initially voted in support of the tax but who were facing antitax sentiment from businesses and consumers in their districts. And, the industry formed a political action committee to support commissioners during their next elections who opposed the tax at repeal time.^41,42

BOX 1. Examples of Opposition and Protax Groups Regarding the Cook County, Illinois, Sweetened Beverage Tax.

Opposition Groups	Protax Groups
Industry	National health associations
•  American Beverage Association, Coca-Cola, PepsiCo, Dr. Pepper/Snapple, Illinois Beverage Association, Tampico Beverage (Illinois Company)	•  American Academy of Family Physicians, American Academy of Pediatrics–Illinois Chapter, American Dental Association, American Heart Association, American Medical Association
Industry and retail-related coalitions	Illinois associations and coalitions
•  Can the Tax Coalition, Illinois Food Retailer Association, Illinois Retail Merchant Association, Illinois Restaurant Association, National Association of Convenience and Fuel Retailing, We Deliver in Chicago	•  Illinois Academy of Family Physicians; Illinois Action for Children; Illinois Alliance to Prevent Obesity; Illinois Association for Health, Physical Education, Recreation & Dance; Consortium to Lower Obesity in Chicago’s Children; Illinois Public Health Institute; Northern Illinois Public Health Consortium
Unions	Unions
• National Taxpayers Union, Teamsters Joint Council	•  AFSCME Council 32, Federation of Labor–Chicago, IBEW 134, IUOE Local 399, Laborers Local 1092, SEIU Local 73, Teamsters Local 700 PAC
Restaurateurs	Local coalitions
• Home Run Inn Pizza	•  AIDS Foundation of Chicago, Blue Island Community Health Coalition, Brighton Park Neighborhood Council, Chicago Hispanic Health Coalition, Chicago Breast Cancer Task Force, Evanston Health Advisory Council, Hispanic Health Coalition of Chicago, Latino Organization of the Southwest, Pilsen Alliance, Puerto Rican Cultural Center, Southwest Organizing Project
Retailers	County actors
• Pete’s Fresh Market	•  Board president, County commissioners (8), County Department of Revenue
State and County actors	Clergy
• State legislators (9) and County commissioners (13)	•  Southland Ministerial Health Network, pastor of Stone Temple Church in Chicago
Local governments	Prominent individuals
•  Chicagoland Chamber of Commerce, Elgin Chamber of Commerce, Cook County Treasurer	• Sargent Shriver, former New York City Mayor Michael Bloomberg
Clergy
• Southside pastor

Note. AFSCME = American Federation of State, County, and Municipal Employees; IBEW = International Brotherhood of Electrical Workers; IUOE = International Union of Operating Engineers; PAC = political action committee; SEIU = Service Employees International Union.

By contrast, the protax coalition did not have the same degree of support or time to mobilize into a large-scale public health advocacy coalition or to garner grassroots support. An existing statewide coalition of 80 organizations (led by AHA) did not fully support the SBT because of the ASB inclusion, which led to a fracturing of an otherwise strong and cohesive coalition. As 1 KI noted, the inclusion of ASBs in the ordinance was “an albatross” around the neck of advocates and the ordinance itself (KI 3). Unlike the antitax campaign that had national union (e.g., Teamsters) support, the protax campaign was only supported by local unions of workers who would be directly affected by budgetary layoffs if the tax revenue were not generated. And, while the protax coalition was supported by a $10.2-million television advertising campaign funded by former New York City Mayor Michael Bloomberg, which aired between August and October 2017, this was the primary funding source the protax coalition had to counter the antitax messaging. (Bloomberg also committed to support protax commissioners at election time to counter the antitax political action committee noted previously.⁴³) One KI noted that they had been building a strong grassroots coalition but ran out of time to mobilize and did not anticipate the temporary restraining order that delayed tax implementation (Figure 1) and losses in grassroots support. Furthermore, when AHA, IPHI, and other advocates met with commissioners, it was mainly to discuss the health benefits of a beverage tax rather than approaching their dialogues with commissioners as a political discussion.

Transparency About the Tax Purpose

The Sweetened Beverage Tax was first and foremost about revenue generation.

From the outset, the public and the media honed in on the disconnect about the SBT purpose. While 12 of the 16 clauses in the ordinance’s preamble mentioned the health impacts of consuming SSBs and ASBs,¹ most of the framing about the tax in public forums and media quotes was around Cook County budget needs, with 22% of all of the news-related documents addressing this issue. The overwhelming proportion of news-related stories stated that the SBT purpose was to fill a $200-million budget gap. And, a poll conducted by We Ask America before the repeal vote found that 77% of respondents believed that the tax was to raise money as compared with only 11.7% saying it was “intended to ‘improve health.’”⁴⁴ By contrast, the president’s office noted a 2-fold purpose—to both generate revenue and to help the County population’s health; however, as the quote in Appendix C illustrates, the president ultimately acknowledged that the tax primarily was about revenue generation.

If this were really about public health, then a portion of the revenue should have been dedicated to it.

There was a consistent sentiment among the KIs, protax testimony submitted to the board, and in advocacy materials about the importance of dedicating a portion of the SBT revenues to public health prevention programs (which the ordinance did not call for). The industry called out the County on this point in their court filings (Appendix C). In interviews and the documents, the County noted that funding would go toward County health–related programming, but the money was going to flow into the general fund and then be transferred to other funds, including the health fund, rather than being specifically dedicated a priori.

Understanding the Local Context and Constraints

Ultimately, the SBT repeal came down to miscalculations about the public pushback attributable to an overly taxed climate throughout Illinois and legal constraints imposed upon the county by virtue of existing state and federal law that made it difficult to appease opponents.

“Tax fatigue” in Cook County and statewide.

One of the major rallying cries among the public related to “tax fatigue” in Cook County, locally, and statewide. This sentiment was heard by County commissioners who switched from initially supporting the tax to supporting the repeal because their constituents were tired of “being taxed out of the state, out of the county.”⁴¹ In the end, the president agreed and blamed “tax fatigue” for the enormous public outcry about the SBT.⁴⁵

Legal constraints affecting the type of tax and taxable beverages.

One unique challenge faced by Cook County was that under the state’s Home Rule law, they were not legally allowed to impose an excise, distributor, or occupation tax⁴⁶—all of which would incorporate the tax into the shelf price that consumers see (the preferred route taken by other jurisdictions) rather that at the point of sale (i.e., the cash register), which is what happened with the SBT. The Home Rule law was not a beverage tax preemption—in fact, exemptions are made for alcoholic beverages (but not for nonalcoholic beverages). The state law allowed the County to impose a use tax (in addition to the existing sales tax), which is collected by retailers and distributors on behalf of the County from the consumer at the point of sale, but as a result, the tax could then not be applied to purchases made with the federal food stamp program, the Supplemental Nutrition Assistance Program (SNAP), because it would be considered a tax upon a tax.

In addition, the inclusion of ASBs was primarily because of concerns about violating the state constitution’s Uniformity Clause which states that:

In any law classifying the subjects or objects of non-property taxes or fees, the classes shall be reasonable and the subjects and objects within each class shall be taxed uniformly. Exemptions . . . shall be reasonable.⁴⁷

Essentially, the County concluded that the Uniformity Clause meant that both packaged (bottle and can) and fountain sodas would have to be treated equally from a tax perspective (i.e., it would be difficult for retailers to apply a tax to SSB fountain drinks but not to ASB fountain drinks, in particular, had ASBs been exempt from the tax).

Implementation Challenges

Also cited in the opposition court filings and noted in 7% of the news-related documents were the numerous regulations and regulatory revisions issued by the County (Figure 1). Opponents felt that the constantly changing regulations led to additional confusion. Some revisions were because of rulings or decisions being handed down to the County from the Illinois Department of Revenue (regarding point-of-sale tax application) and from the US Department of Agriculture (via the Illinois Department of Human Services) regarding the fact that the tax could not be applied to SNAP purchases. One of the KIs speculated that the opposition intentionally asked lots of questions that resulted in the numerous regulatory issuances and constant updating of the County’s Web site’s frequently asked questions document.³

Tax Repeal and Strong Opposition Media Campaign

Protax supporters faced an uphill battle with the media. All of the major Chicago-area newspapers (i.e., the Chicago Tribune, the Chicago Sun-Times, and the Chicago Daily Herald) ran SBT opposition editorials.^48–50 Several KIs noted that they tried to engage in letter-writing campaigns and to submit op-ed pieces, but most of their submissions were not published. Of the 30 news pieces coded for editorial, only 1 was an op-ed from a protax group (IPHI).

At the same time, the media stories (which really started in earnest in May 2017) focused primarily on messages that resonated with voters and with County commissioners (Figure 2). The predominant issues noted in the news media related to residents having “tax fatigue,” negative impacts on local businesses (i.e., restaurants and retailers), cross-border shopping (i.e., leaving the county to purchase beverages and other items, which negatively affected the local economy), arbitrary taxation (i.e., taxing some but not all sweetened beverages), examples of tax misapplication (e.g., to bottled water), and distrust of the local government. This concerted media focus on the perceived or actual negative consequences of the tax created an overall anti–beverage tax climate that was very difficult for the protax movement to overcome.⁵¹

FIGURE 2—

News and Other Document Attention to Opposition Reasons: Cook County, Illinois, May–October 2017

Note. Govt = government.

DISCUSSION

The Cook County experience provides numerous lessons for public health advocates and decision-makers to consider for future beverage tax efforts. First, for the tax to garner support in the context of public health, previous research has shown that dedicating tax revenue for health-related programs, linking SSB consumption to health outcomes, and providing public education about the health effects of SSB consumption were all associated with protax messaging success, while antitax messages addressed negative economic effects on businesses and government restriction of personal choice.¹⁹ Although Cook County included 12 health outcome–related whereas clauses in the ordinance, they did not lead with a health message when promoting the tax and, as noted by KIs and industry, they would not commit to dedicating tax revenue for health. And, while the antitax messaging in Cook County also focused on negative impacts on businesses and government restrictions on choice, Cook County also faced a unique overly taxed environment that other jurisdictions had not experienced, thus highlighting the need to understand the local context.

Second, although Cook County and Philadelphia’s beverage taxes both included SSBs and ASBs, Philadelphia did not face the ASB pushback. Unlike Cook County, where the tax was really considered to be about filling a $200-million budget gap, in Philadelphia, the tax was framed around the goal of providing universal prekindergarten citywide and intentionally not about health. This framing shifted contentious debates about government involvement in individual choice to one about how to finance universal prekindergarten—an issue that garnered broad public, private, and policymaker support.²⁰ Moreover, in other jurisdictions, advocates were able to frame their messages around the negative health effects of SSBs²¹; however, Cook County could not because of the ASB inclusion, which ultimately constrained the formation of a strong protax coalition, a key element elsewhere for mobilizing support and getting a beverage tax passed.^17,31 And, because this became more of a political campaign, it needed to be approached as such. In a typical political campaign, opposing sides compete for votes, money, air time, and media coverage. Successful campaigns are well-funded; planned out in advance with a specific timeline (often 1 year or more); backed by a strong, supportive, and cohesive coalition of supporters from a wide range of constituency groups; and able to garner grassroots support.⁵² None of this happened in Cook County.

Third, the news media’s role in public policy debates goes beyond the traditional role as gatekeeper of information and moderator of political issues. Realistically, the news media is not always balanced. It is shaped by surrounding economic, political, and sociocultural forces in which some aspects of an issue are emphasized while others are downplayed depending on public sentiment.^23,53 In Cook County, all 3 major newspapers ran editorials in opposition and provided virtually no protax stories or opinions and honed in on the economic and political issues and the “tax fatigue” in the County—all issues that would bolster the antitax movement. The example in Cook County should be taken in context; other jurisdictions have seen positive, pro–public health support for beverage taxes, and future beverage taxation efforts should seek to gain media support early in the process lest they may have an experience similar to Cook County’s.

Limitations

The findings in this study should be considered with the following limitations in mind. First, this was a qualitative study involving interviews and a document analysis. The KIs were primarily protax advocates, but the industry referred us to the court filings and news media for their perspective (which were depicted herein). Second, it is possible that we overlooked some documents in the collection process; however, we compiled 340 documents, which allowed for full saturation during the coding and analysis process.

Public Health Implications

Ultimately, the Cook County SBT was less about health and more about revenue. It achieved the revenue goal—raising $61.5 million in 4 months.⁷ Yet, the health message was lost in the messaging as the majority of the media focus was on the revenue needs. That framing did not resonate with the public, particularly in a jurisdiction with high levels of public distrust of government. And, even with public trust, a health frame does not always work—Philadelphia had previously tried on 2 occasions to pass a beverage tax framed around health and neither succeeded; it was not until the change in frame to an issue that everyone could support (i.e., universal prekindergarten) that the tax was passed.

The case of Cook County further illustrates how important strong coalitions are to any effort. In Cook County, the protax coalition went up against a well-resourced antitax coalition that did not just include the beverage industry—it was significantly bolstered by the retail and restaurant industries—that was able to mobilize multiple industries and businesses but also had the financial resources to support a concerted grassroots and lobbying campaign. Thus, a primary lesson from Cook County was that the antitax movement was bigger than just “big soda”—the beverage industry was able to mobilize and support the retail and restaurant industries into being vehement and vocal opponents of the tax, which is what caught the attention of the Board and the media—the adverse impacts on local businesses and the local economy. Nonetheless, the experiences and lessons in Cook County can help future beverage tax campaigns and public health coalitions to learn what “not to do” in the future.