CHICAGO (CBS) — Now that Mayor Brandon Johnson’s planned property tax increase is failinghe must find the money somewhere to make up for the nearly $1 billion budget deficit.
One idea for a source of that money is to tax liquor sales even more heavily. And many in the hospitality industry are not happy with that idea at all.
Those in the industry who spoke to CBS News Chicago said their margins are already so thin that an increased liquor tax could push business owners to close their doors — and drive customers to drink out of town.
At the Irish Nobleman, at 1367 W. Erie St. in West Town, owner Declan Morgan says his neighborhood bar simply can’t absorb any more taxes without cutting back on staff or passing them on to customers.
“It’s disappointing. It’s a great city. But there are so many restaurants and bars in this city going and closing,” Morgan said. “We are definitely considering leaving the city, so Chicago is not doing us any favors.”
This week, Mayor Johnson’s $300 million property tax increase was unanimously rejected by all fifty councilors. But the mayor’s budget also calls for a 34% increase for wholesale beer sales and about 35% for other spirits.
“The consumer isn’t blaming the city of Chicago or the mayor. They’re blaming me, the restaurant owner — that it’s my fault because I increased it,” Morgan said. “But I have no choice. If I don’t increase it, we will go bankrupt.”
The Distilled Spirits Council, a national lobbying group, said Chicago already has one of the highest taxes on spirits: $13.73 per gallon.
“Consumers will ultimately have to foot the bill,” said Ainsley Giglierano, vice president of public affairs for the Distilled Spirits Council.
The Illinois state tax on distilled spirits is $8.55, which Chicago taxpayers pay on top of the local tax. The spirits tax is $3.25 in Wisconsin and $2.68 in Indiana.
“If prices rise, consumers will shop elsewhere, or go to the bar just outside the city limits,” says Giglierano, “and that will ultimately impact these local businesses.”
Steve Hartenstein is a restaurant owner and president of the Illinois Restaurant Association. He also fears what a spike in liquor taxes in the city would mean for the industry.
“We are the economic engine of every city and state in the hospitality world,” Hartenstein said. “It makes it impossible to continue doing business. Everyone has to make money.”
The City Council will continue to hold hearings on the budget in the coming weeks, and the budget should be finalized by the end of the year.
Charlie de Mar
