Tax Revenue from Chicago’s New Bottled Water Tax Way Off

March 31, 2008

According to the Chicago Sun-Times, revenue from the 5 cent per bottle tax is running 36% under projection since it went into effect on January 1. The city says it’s because people don’t buy water in cold weather; the industry notes that suburban bottled water sales (without the punitive tax) have skyrocketed:

January collections were $554,000. That’s far short of the $875,000-a-month needed to meet the city’s $10.5 million-a-year projection.[…]

David Vite, president of the Illinois Retail Merchant’s Association, acknowledged that bottled water consumption rises with the temperature.

But that doesn’t explain away what Vite calls “enormous increases” in suburban bottled water sales, particularly in stores near the Chicago border.

We discussed the silliness of singling out bottled water for a special tax here, and the less silly legal problems associated with the tax here.

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