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Businesses blindsided by food tax hike

Evanston business owners say they were taken by surprise by the City Council’s vote Monday to tack a 1 percent sales tax hike onto restaurant bills.

Chamber of Commerce Executive Director Jonathan Perman says City Manager Julia Carroll had told the public and business owners that the food and beverage tax hike would only be considered if the real estate transfer tax referendum failed to pass.

"Given that, we didn’t feel it was appropriate to start making an argument against the food tax before the results of the referendum were known," Perman says.

But Monday, on the eve of the referendum vote, Alderman Ann Rainey, 8th Ward, proposed that the council adopt the food tax hike and, with little discussion the aldermen voted unanimously to impose it.

They also increased the severity of the new bite into restaurant profits by removing an idea the city manager had proposed that would have coupled the tax hike on food with a decrease in the tax on alcoholic beverages.

Perman says the increase will give Evanston the highest food tax of any nearby community and the total tax on restaurant liquor sales will be 15 percent, by far the highest in the region.

"The council doesn’t seem to recognize that this is not just a question of an individual or family going out to have a meal," Perman said.

He says many larger Evanston restaurants and the city’s hotels get a lot of their trade from businesses and other groups planning large parties — traffic that can easily be shifted elsewhere.

"If somebody is hosting a party and is going to spend $5,000 on liquor, the tax in Evanston would be $750, while in Glenview it would be just $412," he said.

"That’s real money and it affects who gets the business," Perman said.

Perman says several hotel and restaurant owners plan to testify about the tax at the council’s next budget meeting on Saturday.

As approved Monday the food tax hike is projected to raise $849,000 compared to about $500,000 if it had been paired with a 2 percent reduction in the liquor tax.

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