Tuesday, September 01, 2009
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Ill. sales taxes on candy, soft drinks up today

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[September 01, 2009]  SPRINGFIELD -- Illinois consumers will pay more for toiletries, candy, soft drinks and liquor starting Tuesday as lawmakers raise cash to pay for a statewide construction program.

RestaurantMost candy -- currently carrying a 1 percent sales tax -- will be taxed at 6.25 percent. And it'll be the same for shampoos and toothpaste that until now were taxed at the lower rate if shopkeepers deemed they had a medicinal effect.

Bottled soft drinks with added sweetener or flavoring, such as iced tea, will be taxed more, just like soda pop is now. And liquor distributors will pay more for alcohol. That cost invariably will be passed on to consumers.

All told, the changes should raise about $150 million a year toward a $30 billion building plan for roads and schools. The program also includes hundreds of millions of dollars for local pet projects of lawmakers.

Gov. Pat Quinn also approved hikes in the cost of driver's licenses and plates and OKd video poker in places such as taverns to increase revenue -- scheduled to bring in $600 million more annually -- to pay for what officeholders said was a long-overdue plan to put people to work and improve the state's infrastructure.

"Most retailers are in a position of saying we need a capital bill. This was part of a way to get it, and so we're living with it," said David Vite of the Illinois Retail Merchants Association.

Most of the sales-tax changes attempt to streamline the system. While food and drugs have been taxed at 1 percent for the past quarter-century, some products -- a dandruff shampoo or a sensitivity-reducing toothpaste, for example -- have qualified for the lower rate, but that is changing.

"The marketing information on the outside of the box will not determine its tax rate," Illinois Revenue Department spokeswoman Susan Hofer said. "If you buy shampoo, you pay the general sales tax rate."

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Lawmakers used definitions from a national sales-tax streamlining project. But that definition is still sticky when it comes to candy. Until now, candy has been taxed as food, but it will go to the higher rate -- unless it has flour or needs refrigeration. Critics have questioned why licorice, which contains flour, should be exempt from higher sales tax.

In many communities, the sales tax is higher because local governments impose their own tariff on purchases.

Liquor excise taxes, paid by distributors but undoubtedly picked up by consumers, will increase as well.

They equate to a 2.6-cents increase on a six-pack of beer, 13 cents on a bottle of wine and 81 cents for a fifth of liquor.

One prominent distributor, a company controlled by Chicago Blackhawks owner Rocky Wirtz, filed a Cook County lawsuit last week to stop the tax. His company claims the law unfairly singles out distilled spirits, applying a heavier share of the tax increase on hard liquor than on beer and wine.

A hearing is scheduled for Wednesday.

[Associated Press; By JOHN O'CONNOR]

John O'Connor is an AP political writer.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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