(The Center Square) – As Chicago officials aim to replace lost revenue from the state of Illinois’ repealed grocery tax, producers and industry advocates say a proposed tax hike on alcohol would punish retailers and consumers.
A group of Chicago aldermen proposed a 29% increase in the city’s sales tax on retail alcohol sales. The tax was included in the council members’ budget alternative to Mayor Brandon Johnson’s head tax on employers.
Hospitality Business Association of Chicago Managing Director Pat Doerr said consumers are stressed by state and local taxes.
“Stressed consumers don’t go out. They cut back spending,” Doerr said. “I can’t imagine if you’re a stressed consumer and all of a sudden you’re hearing and learning that we could potentially be at 13.5% on your grocery cart purchase of beer, wine or spirits that that’s going to make you want to go out and buy more.”
Doerr said business owners won’t be able to pay their property tax bills when customers flee to the suburbs.
“It will punish all Chicago retailers, not balance the budget,” Doerr said.
City officials have been trying to address a projected deficit of more than $1 billion after Johnson said he would not balance the budget “on the backs of working people.”
Doerr said, as far as he knew, the city did not ask for a longer phaseout of the grocery tax repeal by Gov. J.B. Pritzker and the General Assembly.
“They knew that grocery tax was going away and there was no chance of passing it at city council, and now we’re the life preserver for that lack of foresight,” Doerr said. “That’s not fair to our small independents.”
KOVAL Distillery owner Sonat Birnecker Hart said the tax would affect a lot of local businesses.
“And I can tell you who it will also affect: local farms that are not going to be able to provide us with the grain that they’re growing, because we’re going to have to cut back, because this is going to affect our sales,” Birnecker Hart said.
Birnecker Hart said some distillers have already scaled back, left the city or closed.
Doerr said Chicago already has by far the highest alcohol taxes in the Midwest.
“For $30, it’s an extra dollar,” Doerr said of the new tax proposal.
Doerr suggested that aldermen could consider regulating and taxing hemp instead, although a council committee recently followed the federal government’s lead by advancing an ordinance to ban most hemp sales in the city.
Johnson spoke before a meeting he had scheduled with a group of aldermen on Monday. The mayor said his administration had concerns about the proposed alcohol tax and did not include it in his budget plan.
The city council adjourned quickly Monday after the body did not have enough members present to have a quorum. The council is scheduled to meet Tuesday and three additional times before the Dec. 31 deadline to pass a budget.
