The war on bottled water begins in Chicago

Live in Chi-town? Better buy your bottled water before midnight, or you’ll be paying more for it next year (h/t: ST reader JM):

Chicago’s impending bottled water tax has thrown the city into an uproar. A group of politicians, including Congressman Jesse Jackson Jr., staged their own version of the Boston Tea Party, by pouring bottled water into the Chicago River. The Illinois Retail Merchants Association, the Illinois Food Retailers Association, and other groups are threatening to challenge the law in Cook County Circuit Court after it goes into effect in the New Year. Retailers on the city’s borders are stocking up on water in expectation of higher sales.

The law is a pet project of Alderman George Cardenas. It’s intended to raise revenue (about $10.5 million annually, by city estimates), to discourage the use of environmentally harmful plastic bottles, and also to address Cardenas’s ridiculous obsession.

The Alderman blames the city water and sewer department’s $40 million budget shortfall on bottled water consumption, an allegation that — pardon the pun — doesn’t hold water.

The 2007 water rates for Chicago and its suburbs is $1.33 per 1,000 gallons consumed; sewer rates are calculated at 83 percent of the water bill, or $1.10 per 1,000 gallons consumed. Chicago consumers would need to consume an additional 16 billion gallons of tap water a year to make up the budget shortfall — enough to fill almost 25,000 Olympic-sized swimming pools.

As for the revenue estimates, they are also likely all wet. While politicians recognize that raising the cost of bottled water will discourage people from buying it, they anticipate a continuous, if not expanding, revenue base from bottled water sales in future years.

Thanks to existing loopholes, the bottled water tax won’t collect a fraction of the money that the city expects. Under the new law, Chicagoans would be charged 5 cents per bottle of still water, but nothing for carbonated or fortified water, which are considered soft drinks and thus not direct competitors of Lake Michigan’s finest.

The state of Illinois’ Retailers’ Occupation Tax Act states that “‘soft drinks’ means any complete, finished, ready-to-use, non-alcoholic drink, whether carbonated or not, including but not limited to soda water, cola, fruit juice, vegetable juice, carbonated water, and all other preparations commonly known as soft drinks of whatever kind or description that are contained in any closed or sealed bottle, can, carton, or container, regardless of size.”

Coffee, tea, still water, infant formula, milk or milk products and drinks containing 50 percent or more natural fruit or vegetable juice are exceptions. (Isn’t this beginning to sound like something out of Dr. Strangelove?)

CBS 2 Chicago reports that a lawsuit is underway:

But several organizations are out to invalidate the new tax, which was approved in November as part of Mayor Richard M. Daley’s $275 million city budget.

The Illinois Beverage Association is among the groups that plans to file a lawsuit to invalidate the tax. The organization argues that the tax will “disproportionately hurt low- and fixed-income families, who spend a greater percentage of their income on food and drinks. This includes senior citizens.”

The group said it plans to file the lawsuit in early January, along with several other trade groups.

Tim Bramlet of the Beverage Association said the plan for the lawsuit comes after a failed attempt to argue against the tax before the City Council.

“We had tried to argue with the City Council during the debate of the issue that the whole idea of the tax was misguided, and we suggested there were some legal ground that the tax went through, so we’re prepared to file through on behalf of Chicago consumers and retailers, and see if we can’t get it struck down.”

[…]

Ald. George Cardenas (12th) first proposed the bottled water tax in August. He said the decline in water usage had contributed to a nearly $40 million shortfall in the city’s water and sewer funds.

Cardenas also said in August that a bottled water tax would help the environment by dissuading people from buying the plastic bottles that end up in landfills.

Ah, ya gotta love the “it’ll help others” excuse city “leaders” always given when it comes time to dream up ways to collect more money from the people.