Evanston’s City Council is scheduled Tuesday to discuss a recommendation from the city’s liquor board to cut the 6% tax on liquor sales and raise the general sales tax to make up for the lost revenue.
A city staff memo say the proposal has split the local business community, based on survey responses from the Chamber of Commerce, Downtown Evanston and the Main-Dempster Mile. Some merchants favor the change, others prefer to keep the existing system or make a range of other adjustments.
A staff memo says the city’s long-standing 6% tax on liquor sales is the only one of its kind in the metro area. Most surrounding communities instead have a food and beverage tax, a packaged liquor tax, or both. Skokie, for example, imposes a 2% tax on food and beverage sales.
Evanston, the memo says, doesn’t have either of those taxes.
Restaurateurs have long complained about Evanston’s liquor tax — saying it drives diners to other communities and results in lower tips to servers from diners shocked about the size of their bill.
The city’s 6% on liquor sales is applied on top of the general sales tax rate of 10.25%, meaning restaurant customers are paying a total tax of 16.25% on the liquor portion of their bill.
By coincidence, that happens to be the same as the combined 16.25% state, county and municipal sales tax rate on adult use cannabis in Evanston.
The liquor board proposes cutting the liquor tax to 2% from 6% and increasing the home rule sales tax by 0.25% to make up for what would be roughly $2 million in lost revenue.
Evanston currently has the highest citywide total sales tax rate among nearby communities at 10.25%. That is matched by Chicago, Lincolnwood and Skokie. But Wilmette is at 10% and Glenview charges 9.75%
However, two of the nearby towns impose higher rates in certain business districts.
Skokie tacks on an extra 1% in the Old Orchard district while Glenview charges an extra 0.5% in its Chestnut-Waukegan business district.
The proposed change is being presented as a special order of business discussion item by the mayor, who also serves as the city’s liquor commissioner.
Assuming the council reached consensus Tuesday about making a change, the proposal would have to return to Council later in ordinance form to be adopted.
It’s hard to believe that a city that was dry until not much more than 40 years ago would seriously consider decreasing taxes on booze while raising them on food. No one needs to drink booze, everyone needs to eat. Any semblance of progressive is lost when it’s clear that the alcohol lobby can push over the malleable legislators.
Unless I misunderstand the proposal, and I’m fairly certain you do not understand this proposal, this does not increase the tax on grocery store food purchases. It places a small tax on purchases of restaurant prepared food for takeout or onsite consumption only. Except for ready to eat prepared grocery store food regular grocery purchases would not be affected in any way. Indeed, the state is going to drop their added sales tax on grocery store purchases so food for home meal preparation will actually be lowered. While everyone needs to eat nobody has to eat their meals out at restaurants.
Hi info,
While you are correct that the proposed new tax would only apply to prepared food, you have missed a detail about the state plan to cut its sales tax on groceries. That proposal would allow municipalities to impose a matching replacement tax on groceries, to replace the money the municipalities get now from the state tax.
(Info on that deep in this budget story from Capitol News Illinois.)
— Bill
Thanks, Bill, for providing that detail. And again, I could well be wrong, but since Evanston is a home rule community I believe council can raise or lower grocery taxes as they see fit. Let me know if I am incorrect about that.
I don’t think there has been any discussion so far to change or increase grocery tax rates in Evanston. And frankly there should be no acceptance of that as part of the proposal. People have already been most negatively affected by food inflation so any state grocery tax cut proposed should be allowed to remain.
This proposal is meant to be revenue neutral and assist small, local and independent business operations. The final 16.25% liquor tax is extortionate and represses sales and repeat customers. The proposal is meant to be revenue neutral, but it is very possible that customers will order that second beer and ultimately generate greater revenue for the city. At the very least customers will no longer be shocked & outraged by seeing a 16.25% tax on a portion of their bills, hopefully customers from across Evanstons borders will return with greater frequency.
Bill
Thanks for your detailed reporting, I am somewhat confused though as to the .25% addition to the sales tax. My read from the article is that increase will affect ALL purchases in Evanston, raising our tax rate for any item to 10.5%, or would it be limited to prepared food? Thanks for any clarification.
Hi Mrjhs,
The proposal from the Liquor Control Board would raise the home rule general sales tax on all item by 0.25%.
A possible alternative considered by the liquor board — used in Skokie and some other towns — would impose what for Evanston would be a new, 2% tax on sale of prepared or ready-to-go foods and beverages in restaurants and food stores and on the sale of packaged liquor. In that model the tax would exempt grocery store items that require preparation at home before consumption.
In comments on this story we’ve also been discussing a measure at the state level that would eliminate a 1% tax on grocery items that’s now paid to municipalities by the state. That measure also creates the option for the municipalities to impose a replacement 1% tax on grocery items on their own initiative. (You might consider that to be a bit of a shell game by the legislature — an attempt to try to blame shift.)
— Bill