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Check your receipts—retailers get county taxes wrong and it's not just the soda tax

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If you drive a car, I'll tax the street/If you try to sit, I'll tax your seat/If you get too cold I'll tax the heat/If you take a walk, I'll tax your feet.*

We're barely a week into the maligned Cook County sweetened beverage tax and the lawsuits are coming fast and furious. Suits already have been filed against Walgreens, McDonald's and 7-Eleven over erroneous and inconsistent collection of the tax. Even the USDA is giving the county grief over it.

That's on top of the ongoing beverage industry litigation that is working its way through the appeals courts.

You think that's a little sign it's a bad tax (as if we needed another)? This may go down as one of the biggest turkeys in the history of local taxes. It hasn't been a good summer to be Toni Preckwinkle.

City and county residents, already stung by the recent state income-tax hike and shopping bag tax, are not of a mood to suck up yet another nickle-and-dime tax like they have in the past. Of course they’re stoked by a news media that won’t let this go. Given the media saturation on this I've got to conclude a lot of members of the Chicago press like to drink pop.

In my opinion, the county would have been better off just taxing regular non-diet colas and leaving other "sweetened" beverages alone. It would have created less confusion among consumers and retailers, probably led to fewer legal challenges, and saved the county the money it’s costing to fight them not to mention the terrible publicity that's resulted.

The problem with taxes of this kind is that their collection depends on the cooperation and coordination of thousands of third-party retailers who are responsible for calculating and imposing them correctly. That's a recipe for disaster.

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The soda tax isn't the only local tax that food retailers can't get right.  The Cook County alcohol tax is inconsistently applied by retailers. I know because I caught Mariano's overcharging for the tax, and I called them on it.

My guess is that Mariano's may have been overcharging county shoppers for this tax for three years or longer.

Cook County imposes an alcoholic beverage tax that is calculated by the weight of the alcohol content. You may have noticed that when you buy beer or wine, there's a small tax, usually a few cents, tacked on in addition to the 10.25% Chicago sales tax.

I like to buy ready-made margaritas like those sold by Cuervo and Chi-Chi's. I first noticed in 2014 at the Ravenswood Mariano's that there was a huge tax added when I would purchase one, amounting to about 25-percent of the shelf price.

I thought, this can't be right. It didn't seem that high when I bought the same thing at Jewel.  I brought it to the attention of the staff but nothing came of it because, I was told, "It's programmed into our system and charged by the state. It's not us."

Okay whatever, but I knew better. Then last month I purchased a 1.75-liter margarita bottle at a different north-side Mariano's. When I looked at the receipt: Sure enough, same deal. Underneath the product it said ALCOHOL EXCISE TAX: $2.40.

receipt

(By the way, how many people toss their grocery receipts without even glancing at them?  With all the errors the registers make on pricing all the time, along with these tax issues, do they know or care how much money they're losing? Call me anal, but I go over every receipt with a fine-tooth comb and it pays off.)

This time I was not going to let it go. I marched over to customer service and said, You are charging too much for the alcohol tax. I got the same vapid stares and the same song and dance: We don't control it, it's the government. I said, But other stores don't charge this much tax for the exact same product. How can it be the government? There's no local law that can dictate you have to pay more tax for a certain item at Mariano's than at any other store.

I was on a mission. I headed straight for Jewel and bought a similar-sized ready-made bottle of Mai Tai. The county alcohol tax applied: Twenty-eight cents.

I Xeroxed both my Mariano’s and Jewel receipts and mailed them to the president of Mariano’s with a letter asking basically, How do you explain this?

Several weeks later I received a graciously worded letter from said president apologizing for the error and the inconvenience it caused me. He explained that the stores had been incorrectly “classifying” their spirit mixers at the point-of-sale but had now “corrected” the problem. I concluded from that that they must have been applying the tax to the entire weight of the bottle instead of the percentage of alcohol content in it. According to the label, the margarita mixers contain 10% alcohol. In other words, the product was likely being taxed as if it contained 100% tequila, instead of 10% alcohol and 90% lime juice and other ingredients.

I wondered if any shoppers besides me had ever noticed this. Someone had to have noticed it. Maybe they did but let it go, or figured the local tax really was that high and didn’t pay attention to what the tax was at other stores.

The bottom line is that if you’ve shopped at Mariano’s stores in Cook County during the past several years and you buy these mixers on a regular basis, you have been paying more than eight times the amount of county tax on them than you should have been paying.

Which means the county has been reaping a bonanza from sales of these products at Mariano’s.

The lesson: Always, always examine your receipts and the taxes you’re being charged. Those soda-tax plaintiffs did, but probably because that tax is such a hugely publicized issue right now.

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Speaking of looking at your receipts, did you know that when you buy a restaurant meal downtown or on the near north side you pay a Navy Pier tax? That was a new one on me. I bought a little salad at Hannah’s Bretzel in the Loop. I know there’s an 11.5% city meal tax, but I had never seen “Navy Pier Tax” on my receipt before. I wasn’t buying it on Navy Pier, so why was I being assessed a Navy Pier tax? Was this something new that slipped under the radar amid all the soda-tax hoopla?

Apparently not. It seems that the restaurant tax consists of the regular 10.25% sales tax and a one-percent tax for the Metropolitan Pier and Exposition Authority. This MPEA tax is only assessed on meals purchased north of the Stevenson Expressway and south of Diversey Ave. I had never seen it broken out this way on a receipt before.

I got this information and more from this incredibly informative Civic Federation consumer taxes report, which breaks down all the different taxes by federal, state, city, and county that are assessed on a myriad of different products and services.  If you've ever wondered what is this or that little tax I’m being charged on this thing, that explains it.

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By the way, lost in all the hullabaloo about the sweetened beverage tax and the budget battle in Springfield was the fact that Chicago residents may soon see their phone taxes go up yet again.

This from the Civic Federation:

During the spring legislative session, the Illinois House and Senate both approved a statewide telecommunications bill, House Bill 1811, which included an amendment to the Emergency Telephone System Act allowing municipalities with a population over 500,000 to impose a monthly 911 surcharge of up to $5.00 from January 1, 2018 and until December 31, 2020. As the only city in Illinois with a population over 500,000, this would enable the City of Chicago to increase its emergency communications surcharge on phone services from the current $3.90 per month to $5.00 per month. House Bill 1811 was vetoed by the Governor, but overridden by both the House and Senate on July 1, 2017, becoming Public Act 100-0020.

 

*Written by: GEORGE HARRISON. Lyrics © Sony/ATV Music Publishing LLC.

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