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Retailers push back on Pritzker’s proposal to cap sales tax credit they claim

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(The Center Square) – Gov. J.B. Pritzker’s budget proposal includes going after Illinois retailers’ earnings, something that is not sitting well with industry officials.

Retailers receive a discount of 1.75% of the sales tax they collect from sales as reimbursement for collecting taxes for the state. Pritzker wants to cap the claim at $1,000 a month. His administration said the move would raise about $101 million for the state and $85 million for local governments.

“They’re paying the cost of tax collection and remittance on behalf of the state for every transaction that occurs, particularly electronic transactions which now account for more than 80% of all transactions, so it’s not fair to shift more of that cost onto the backs of retailers regardless of their size,” said Rob Karr, president of the Illinois Retail Merchants Association to The Center Square.

Karr said proponents of the sales tax credit cap claim it will only affect large retail stores. But, Karr said that is not true and would impact retailers of all sizes from an independent grocery to the corner hardware store.

The Illinois Chamber of Commerce also is opposed to the sales tax credit cap.

“This is a stealth tax increase on our retail sector, who are managing increased operating expenses due to rising labor and raw materials forcing them to operate on already razor thin margins,” the group said in a statement.

Karr said obviously there is work to be done during the spring session of the General Assembly.

“This seems to be under discussion every year and we’ll just have to do what we always do, which is educate the legislators about the impacts this would have,” said Karr.

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