After rejecting Mayor Brandon Johnson’s proposed property tax hike, the Chicago City Council is … [+]
Chicago Mayor Brandon Johnson (D) ran on a campaign pledge to not raise property taxes. After winning election, however, Johnson proposed a $300 million property tax hike in a city where residents are already dealing with rising property tax bills on account of increased assessments. On November 14, the Chicago City Council unanimously rejected that proposal.
“It’s a devastating loss for Mayor Johnson,” Alderman Scott Waguespack told ABC following the 50-0 vote in opposition to the Mayor’s property tax hike. In explaining why he voted against the property tax increase even though he is an ally of Mayor Johnson, Alderman Carlos Ramirez-Rosa said he “was listening to my residents.”
“I’ve been here going on 17 years,” Alderman Waguespack added. “I’ve never seen this kind of vote take place, and I think in many of our lifetimes, we’ve never seen this. So it sends a message that that massive property tax increase he was looking for is not going to happen.”
While the proposed property tax hike is now dead, that’s not the case for Mayor Johnson’s proposal to raise the local spirits excise tax. Whereas the property tax hike pushed by Johnson was targeted toward upper-income taxpayers, the Mayor’s proposed excise tax hike would disproportionately burden low- and middle income residents.
At the end of October, Mayor Johnson unveiled his proposal to raise local alcohol excise taxes by 34%. Local business owners slammed the Mayor’s proposed alcohol tax hike during a November 7 hearing.
“As a Chicago-based distillery, we know firsthand how detrimental excessive taxation can be for our customers and our business,” said Sonat Birnecker Hart, president of Koval Distillery. “With more than half of our bottle sales already going towards a tax or fee of some kind, we simply can’t afford a 34% increase in taxes.”
Declan Morgan, owner of the Irish Nobleman, says the proposed spirits tax hike would force him to reduce his workforce or pass along the added cost to customers.
“It’s disappointing. it’s a great city. But so many restaurants and bars are closing down all over this city and state,” Morgan told CBS Chicago about the proposed excise tax hike. “We’re definitely looking at leaving the city, so, Chicago is doing us no favors.”
Critics of Mayor Johnson’s proposed alcohol tax hike point out that adult beverages, spirits in particular. are already among the most heavily taxed products on the market. According to the Distilled Spirits Council of the United States (DISCUS), a trade association representing the spirits industry, a bottle of distilled spirits sold in Chicago is typically assessed taxes and fees that amount to nearly 56% of the retail cost.
“Chicago has the highest alcohol tax rate out of any of the surrounding areas,” said Andy Deloney, senior vice president and head of state government relations at DISCUS. “If this tax passes, Chicago’s alcohol tax would be more than double the average tax rate for similar cities. Consumers will undoubtedly feel this increase when checking out at their favorite restaurant, local bar or distillery. Many will stop dining out and shopping in Chicago altogether in favor of lower prices right outside the city limits.”
Should Mayor Johnson’s proposal be enacted, Chicago’s combined spirits excise tax rate (state, county and city), would be more than two and a half times the average combined alcohol excise tax rate for similar cities. Johnson’s spirits tax hike, critics note, would adversely affect an industry that is particularly important to Chicago’s economy.
“We’re the economic engine to every city and state in the hospitality world,” said Steve Hartenstein, a restaurant owner and chairman of the Illinois Restaurant Association. “It’s making it impossible to stay in business. Everybody’s got to make money.”
Alderman Bill Conway told ABC that he and his colleagues have to reduce spending, As Conway sees it, they “can’t have a situation where we’re going back to the taxpayers asking for more money before we’ve done the homework on our side, hopefully in collaboration with the mayor’s office to make sure that we are making this an efficient government before we’re asking for more.”
It will soon be know whether a majority of Conway’s colleagues heed his advice, as a new budget has to be enacted by the end of the year. In addition to the alcohol excise tax hike, Mayor Johnson is also pushing to raise the personal property lease tax on cloud computing and increase the local tax on streaming services.
