In response to complaints from restaurant owners, Evanston’s liquor board is considering eliminating the city’s 6% liquor tax, but replacing it with a 1.5% tax on prepared foods and booze that would raise roughly the same $3 million a year.
Many other communities in the region have taxes on prepared food and beverages and packaged liquor sales on top of the state and local home rule sales taxes that apply across the board to retail sales.
Evanston, Assistant City Attorney Brian George told the board in a memo, is alone among the 21 communities studied in only imposing the extra tax on liquor consumption.
Liquor license holder say that incentivizes consumers to shop for alcohol in neighboring municipalities with a lower tax rate.
And for restaurant owners it may be particularly galling that three nearby towns — Glenview, Wilmette and Winnetka — don’t impose any of the targeted taxes on prepared food or liquor.
However, as seen in the chart above, the amount of money extracted from Evanston residents per capita by this class of taxes is in the middle of the pack among the communities studied. (The actual impact, of course, may be affected by differences in the number of out-of-town diners in each town.)
George’s memo notes that adding the new taxes would mean more businesses would have to pay, including restaurants that don’t serve liquor. That in turn would mean more work for city staff in administering the program.
One City Council member has expressed skepticism about changing the tax scheme.
Ald. Devon Reid (8th) told residents at a recent ward meeting that while the current liquor tax rate is high, the social costs of alcohol should “be reflected in our taxes.”
Expanding the tax to cover prepared food, he said, would unfairly burden cash-strapped residents trying to feed their families.
And, he said, most consumers probably don’t think about the tax when buying liquor in Evanston.
George tells Evanston Now the Liquor Control Review Board hasn’t set a date for a vote on any changes in the tax scheme and community input on the issue is welcome.
The board’s next meeting date has not yet been set.
Any proposed change in the tax scheme would have to be approved by the City Council.