Chicago braces for bottled-water tax

CHICAGO — In her never-ending effort to maintain her health and appearance, Jill Walker credits bottled water with improving her digestion, maintaining her skin's elasticity and keeping her away from sugary soda.

The Chicago resident drinks one bottle in the morning after her workout. She tosses another into her bag to take to the office and finishes two more with dinner.

"It's a big part of my health regimen," she said. "When I'm properly hydrated, I can feel the difference in my muscles and my energy level."

This week, she may be feeling it in her wallet, too.

Chicago is set to impose a 5-cent-a-bottle tax on bottled water Tuesday, becoming the first major U.S. city to demand such a surcharge.

The move — which officials predicted will secure an extra $10.5 million annually — will help the city plug a budget hole by building on the growing disdain for environmentally suspect bottles.

In the past year, the tide has turned on bottled water, once admired as a healthful alternative to soft drinks.

Critics of the tax said it could create a black market for water and spur consumers to shop in neighboring towns where a case of water will cost significantly less. While convenience-store or vending-machine water may only increase from $1.25 to $1.30 a bottle, the average cost of a 24-pack will go from $3.99 to $5.19, a 30 percent increase.

With 90 percent of bottled-water sales consisting of cases sold at supermarkets, retail experts said the tax will hurt Chicago grocers as customers drive over city lines to save money.

The bottled-water industry expects a 50 percent drop in Chicago sales, putting a dent in anticipated revenue from the tax.

"Just like people go to Indiana to buy cheaper cigarettes and gas, people are going to be going outside Chicago to buy bottled water," said David Vite, president of the Illinois Retail Merchants Association. "Once they're at the grocery store, they're going to do more than just buy bottled water, they'll do all their grocery shopping there."

Walker has decided not to buy her water in the city. She works in Oak Brook two days a week, so she said it will be easy to stop and pick up a case on her way home.

"Why should I have to pay more for water just because I live in the city?" she asked. "It's not fair, and I'm not going to do it."

Chicago officials acknowledged that they want to curb the bottled variety's use and promote city tap water. Illinois residents consumed 270 million gallons of bottled water in 2005, making it the seventh-biggest bottled-water consuming state in the United States, according to New York-based Beverage Marketing.

Consumers will be able to avoid the tax by purchasing enhanced or sparkling water, such as Perrier, Water Joe, Smart Water or Vitamin Water. The additives, supplements or carbonation in those beverages differentiate them enough from kitchen-sink variety to evade the surcharge, according to the new law.

"It has to be like tap water [to be subjected to the tax] because that's the alternative you have to plain bottled water," said Ed Walsh, spokesman for the city's Department of Revenue. "You can't go to the tap and get flavored water or enhanced water."

Once touted as the gateway to a more healthful lifestyle, bottled water has quickly transformed into a symbol of American wastefulness. U.S. sales of bottled water topped 11.9 billion in 2006, a 10 percent increase over the previous year.

Americans drink more bottled water than any other beverage with the exception of carbonated soft drinks, according to the International Bottled Water Association.

To meet the demand, the Earth Policy Institute estimates manufacturers use more than 17 million barrels of oil — enough fuel to run 1 million U.S. cars for a year — in making polyethylene terephthalate plastic bottles.

Only 23 percent of those bottles, however, are recycled, according to the Container Recycling Institute. The rest are tossed in landfills, many of which are short of space.

As bottled-water consumption nearly doubled in the past five years, conservationists launched an aggressive campaign against the industry.

"Bottled water is an easy way to get people involved in protecting the environment," said Rachael Albers, a Lakeview resident who has worked to get bottled water banned from social functions at her church. "Not everyone can buy a Prius or hybrid car. But everyone can stop drinking bottled water."