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Issue Date: Vol. 49, No.8, August 2009, Posted On: 8/4/2009

Illinois Raises Sales Tax On Candy, Wider Range Of Cold Beverages

by Staff Reporter
Pat Quinn, Illinois state legislature, vending, vending machine, vending business, vending routes, automatic retailing, candy tax, soft drink tax, beverages, Illinois Automatic Merchandising Council, food product taxation, Illinois state budget

SPRINGFIELD, IL -- Illinois Gov. Pat Quinn has signed a budget bill passed by the state legislature that increases the tax rate for candy and certain beverages in all retail channels.

The National Automatic Merchandising Association reports that candy previously had been subject to the "low" food sales tax rate, and soft drinks were taxable at the "high" nonfood rate. Under the new law, which takes effect Sept. 1, the tax base for candy changes and the definition of "soft drink" is expanded to include a wider range of cold beverages.

For tax purposes, "candy" will be defined as a preparation of sugar, honey or other natural or artificial sweeteners in combination with chocolate, fruits, nuts or other ingredients or flavorings in the form of bars, drops or pieces. Candy does not include any preparation that includes flour or requires refrigeration -- that is, lollipops, chocolate bars and yogurt-covered nuts are taxable at the higher rate, while chocolate-covered cookies and yogurt-covered pretzels are taxable at the lower one.

The definition of "soft drink" is extended to include nonalcoholic beverages that contain natural or artificial sweeteners. Excluded, and thus taxable at the lower rate, are beverages containing milk or milk products, soy, rice and similar milk substitutes, or that are more than 50% vegetable or fruit juice by volume.

The budget bill was drafted to avert a proposed 50% increase in the state income tax. NAMA reports that it passed as a whole, and the candy and soft drink changes could not be altered without defeating the entire measure.

The Illinois Automatic Merchandising Council observed the entire process closely to make sure that the vending industry would not be singled out for discriminatory tax treatment.

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