Chicago Braces for Candy and Alcohol Tax Hike

Tax rates increase for candy, soda, and alcohol

By Matt Bartosik
|  Tuesday, Sep 1, 2009  |  Updated 10:05 AM CDT
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Chicago Braces for Candy and Alcohol Tax Hike

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A new state tax law defines the difference between candy and "food," and how much each should be taxed.

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A new state tax law takes effect tomorrow that defines the differences between "food," candy, and soft drinks and evaluates an appropriate tax for each.

But it seems a bit off.

Candy that's prepared with flour -- Kit Kat, Whoppers, even ice cream -- is considered "food" and will be taxed at 1 percent.

Candy that isn't prepared with floor -- Blow Pops, Tootsie Rolls, Lemondrops -- is considered "candy" and will betaxed at 6.25 percent.

All other candy will be taxed at the "general merchandise" rate: 6.25 percent.

The listed shelf price will likely remain the same.

It's only a difference of about 6 cents per dollar, but those pennies will add up when Halloween comes around, when consumers will buy candy (and "food") in multi-packs.

Soft drinks are also receiving a clearer definition: "Nonalcoholic beverages that contain natural or artificial sweeteners. Soft drinks do not include beverages that contain milk or milk products, soy, rice, or similar milk substitutes, or greater than 50 percent of vegetable or fruit juice by volume."

Did you catch all that? Coke and Pepsi products are obvious soft drinks, but the category also includes some fruit-flavored drinks (e.g., V8 Splash) that contain only a small amount of real fruit juice. These all will be taxed at 6.25 percent.

Meanwhile, juices and dry mix powders (e.g., Kool-Aid) will be taxed at the 1-percent rate.

Finally, there are three tax categories for liquor: The tax on a six-pack of beer will rise 25 percent, from 10.4 cents to 13 cents. On a bottle of wine, the tax increase is 13 cents, from 15 cents to 28 cents. On a fifth of distilled spirits (like vodka or whiskey), the increase is 81 cents, from 90 cents to $1.71.

While the liquor taxes will be imposed on the distributor, that's not to say it still won't affect shoppers indirectly.

"There is nothing subtle or easy about this tax; it is simply a massive punch in the face," David Azizinamini, owner of Blue Line in Wicker Park, told Metromix in August. "The bottom line is that we will be forced to pass the costs on to our guests, which we do not want to do."

The money is to help pay for a $31 billion statewide construction plan, including repairs to roads, schools, and bridges.

Given the new taxes, will you be stocking up on candy and soda today? Leave your comments below.

Matt Bartosik, a "between blogs" blogger, wonders what is the next indulgence will be heavily taxed.

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