Chicagoans and other residents of Cook County will see soft-drink prices rise after a new tax on sugary beverages was narrowly approved by county officials on Thursday, aimed at both addressing health issues linked to sugar consumption and trimming a budget shortfall.
Cook County, with about 5.2 million residents, is the most populous municipality so far to implement a tax on sugary drinks. Voters in San Francisco and two other northern California cities, Oakland and Albany, approved similar measures on Tuesday.
The Cook County tax will be a penny per ounce.
Michael Bloomberg, the former mayor of New York, whose effort to limit the size of sugary drinks sold in New York was struck down by a court, is among wealthy individuals who contributed to campaigns in favor of the sugar tax in San Francisco.
The consumption of added sugar in foods and beverages has been linked to obesity and type 2 diabetes. The World Health Organization, the U.S. Food and Drug Administration and the American Heart Association have all recommended reducing consumption of soda as a way to cut down on added sugars.
Cook County Board President Toni Preckwinkle cited the WHO recommendations and also said the tax would put the county on a stable financial footing.
“This is an option that reflects our commitment to public health,” she said at the public board meeting.
The penny-per-ounce tax is expected to generate $74.6 million for Cook County in the coming 2017 fiscal year.
The Cook County Coalition Against Beverage Taxes, whose members include convenience-store operator 7-Eleven and various business trade groups representing the beverage, food, grocery and restaurant industries, in a statement called the measure a “regressive tax on working families” that will result in higher grocery bills and lower incomes.
The tax was passed in a 9-8 vote of Cook County’s commissioners, the region’s governing board. One board member was absent.
The rising trend for taxes on sweetened drinks has prompted beverage industry giants like PepsiCo and Coca-Cola to spend billions of dollars on advertising and lobbying campaigns against the measures.
Shares of PepsiCo (PEP) and Coca-Cola (KO) have fallen 2% so far this week. Competitor Dr Pepper Snapple Group (DPS) was down 4% this week.
Beverage makers have largely weathered such taxes in places like Mexico, which introduced a soda tax in 2014, as sales of other products including water rise.
Chicago already has a tax on retail sales of soft drinks in cans or bottles and on wholesale syrups for fountain drinks.