The night before Illinois’ new tax on candy, soft drinks, toiletries and alcohol went into effect, I considered a grocery run for non-flour-based sweets, Arizona iced tea, sensitivity toothpaste and liquor. I then remembered that I have no need for more confections (occupational hazard), am trying to cut back on my intake of caffeine, have plenty of oral hygiene products on hand (courtesy of my dentist) and don’t need to restock my bar anytime soon.
That said, this new tax might drive some people to drink, once they realize what’s happened.
Truth is, few consumers may know what’s going on here. That’s because Illinois’ latest tax increase has largely gone under the radar, receiving little media attention, other than some articles in the Chicago Tribune. Of course, we in the candy industry have been following the new legislation quite closely.
A quick recap: As reported in the Tribune a few weeks back and mentioned in my “Taxation without justification” column in our Aug. 5 sweet & healthy eNewsletter, the state of Illinois recently approved a new tax on grocery items previously counted as “food” by retailers. Under new legislation (which went into effect Sept. 1), a number of mainstream candy products (such as Butterfinger) will be affected … but not all. As the Tribune explained, any item made with flour (such as Twix and Kit-Kat) will remain under the “food” banner and, as such, remain exempt from increased taxation.
This week, The Associated Press broke down the tax into layman’s terms. According to the AP, Illinois’ current state sales tax is 6.25% for general merchandise and 1% for food and drugs. Under the new legislation, bottled or canned beverages will be taxed at 6.25%, just like soda pop. Toiletries that carry medicinal qualities will be taxed at 6.25%, as well.
So will candy, which until yesterday enjoyed the same low tax rate as food and drugs.
The AP notes in a second article that Illinois’ plan should raise “about $150 million a year toward a $30 billion roads and schools building plan,” as well as “hundreds of millions of dollars for local pet projects of lawmakers.”
It remains to be seen what those “pet” projects are. It also remains to be seen how consumers will react in the short- and long-term.
It’s now been more than 24 hours since the tax went into effect, and chances are no one’s really feeling the increase … yet. Kids counting their pennies at the checkout may feel the burn and turn to parents for raises in their allowances, to be sure. But the average consumer may not notice a difference in his or her receipt at first.
But Halloween is right around the corner. Soon, shoppers will be buying bags upon bags of snack-sized candy bars and other sweets … and they’re gonna see a price difference when they pay the cashier. This might lead to more label reading, as consumers search for the word “flour” in effort to save some dough (pun intended). And trick-or-treaters might find themselves the recipients of doughnuts (yum) and cookies … not to mention a lot of Twizzlers, which are among those lucky confections exempt from the higher tax bracket.
Yes, the candy man may be able to take a sunrise, sprinkle it with dew, cover it in chocolate and a miracle for two … but he would never raise the price of everyone’s favorite confections. However, the candy tax can, and will, do just that.
I may need a drink after all.
Editor's Note: What do YOU think of the practice of taxing candy at a higher rate to raise money for state programs? Is it fair? Should candy be taxed as high as, say, alcohol? How do you expect it to affect candy sales, or have you already felt the effects? E-mail your thoughts to firstname.lastname@example.org.