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22 November 2024

Chicago's Bars Fight Against Mayor's Liquor Tax Hike

Restaurant owners warn of economic fallout from proposed alcohol tax increases

Chicago Mayor Brandon Johnson is currently engaged in heated discussions surrounding his proposed alcohol tax hike, which aims to help cover the city’s nearly billion-dollar budget deficit. This proposal, deemed ‘modest’ by the mayor, has sparked significant backlash from bar and restaurant owners across the city.

During recent budget hearings, advocates from the hospitality sector urged the Chicago City Council to oppose the tax increase, which could potentially generate over $10 million annually. The proposal suggests raising the tax on beer, liquor, and wine sales by percentages ranging from 34% to 36%. Bar and restaurant representatives argue this move could drive customers to seek cheaper drinks outside the city, particularly in the suburbs.

"We already pay, among the hospitality industry, the highest beverage taxes not only in the Midwest but also some of the highest nationwide," stated Pat Doerr of the Hospitality Business Association of Chicago. "City Hall’s proposed tax increase would bring us to being the second-highest taxed for enjoying beer, wine, and spirits across the country."

The hospitality industry is already operating on thin margins, with many business owners claiming they cannot absorb the new tax burden after facing increased labor costs. "I think it’s just going to keep more people out of bars and spending money elsewhere," said Scott Weiner, co-owner of Fifty/50 Restaurant Group. "This will hurt us from several revenue perspectives, and this is not something we’re equipped to handle right now."

The mayor’s administration defends the proposal as necessary to adapt to inflation and insists it would introduce only modest price increases at individual establishments. Johnson's team noted the tax increase might translate to just pennies more per drink yet has not provided specific estimates about potential price hikes.

Opponents of the tax raise acknowledge potential for significant revenue but fear the consequences of discouraging consumers from visiting local businesses during economically challenging times. "Retailers of all sizes, from convenience stores to taverns, are already struggling,” commented Michael Harris from the Illinois Retail Merchants Association. "Jeff and Greg at the corner bar or Susan at the local restaurant are experiencing reduced consumer spending as it is, and adding more taxes would push these businesses to the brink of closure."

Businesses across the city voiced concerns about potential shifts of sales tax revenue away from Chicago. Many argue customers could easily decide to dine or drink outside the city limits, effectively diminishing tax revenues intended for local services. "What we are asking today is for the city council to acknowledge the tough straits our industries are facing and stand against the proposed 35% alcohol tax increase," emphasized Doerr.

The response from the mayor’s office came during another budget hearing where Johnson emphasized the need for balanced budgeting and sustainable financial practices. "This is just about keeping up with inflation," Johnson reiterated. He noted how current taxation levels needed updating, positing they were not the highest compared to other cities within Illinois.

The contention doesn’t end with the proposed alcohol tax. Recently, the City Council voted against another funding solution—Johnson's $300 million property tax hike proposal—leaving the administration searching for new revenue sources. Bar owners believe their industry's interests have been repeatedly dismissed.

During several press conferences and rallies, voices from within the hospitality industry stressed their pivotal role within the city’s economy, asserting they've contributed significantly to city coffers over the years. The stakes have been heightened following recent closures of popular establishments, highlighting the persistence of economic struggles even for well-known eateries.

Among the loud voices against the tax increase, several alderpersons have joined the fray. Ald. Anthony Beale of the 9th Ward, for example, noted concerns from various local bar owners and business representatives who have reached out about the ramifications of such a tax hike.

"We’re still reviewing everything, but I can assure you this isn’t sitting well with many of my colleagues, especially those of us close to the city borders," Beale remarked. His colleague, Ald. Peter Chico, disclosed worries about losing business to venues just across the Indiana state line, where liquor taxes are significantly lower.

The nuances of the proposal and its potential impacts call for public discourse among stakeholders, whether they sit behind the bar counter or behind city council desks. Many bar owners argue they've offered enough to the city, now requiring support amid harsh financial realities and looming tax increases.

A growing coalition of business owners and community leaders is rallying efforts to reverse the proposed increase, adamantly determined to protect local entrepreneurs and maintain the vibrancy of Chicago’s nightlife and restaurant culture amid precarious economic conditions. Fueled by community support and economic rationale, they aim to make their voices heard as the council deliberates the long-term impacts of budgetary decisions.

With the city set to review the budget proposals soon, the future of Chicago’s restaurant industry hangs in the balance. Mayor Johnson, facing both pressure to balance his budget and pushback from local businesses, must navigate these turbulent waters carefully as he shapes the future financial health of his city.

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