Possible Chicago liquor tax hike would be disaster, hospitality industry says

CHICAGO (CBS) — With Mayor Brandon Johnson’s planned property tax hike failing, he has to find the money somewhere to balance the nearly $1 billion budget deficit.
One idea for a source for that money is taxing liquor sales even more. And many in the hospitality industry are not happy about that idea at all.
Those in the industry who spoke to CBS News Chicago said their margins are already so slim that an increased liquor tax could drive business owners to close their doors—and customers to drink outside the city.
At the Irish Nobleman, at 1367 W. Erie St. in West Town, owner Declan Morgan says his neighborhood pub simply can’t take on any more taxes without cutting staff or passing it on to customers.
“It’s disappointing. it’s a great city. But so many restaurants and bars are closing down all over this city and state,” Morgan said. “We’re definitely looking at leaving the city, so, Chicago is doing us no favors.”
This week, Mayor Johnson’s $300 million property tax increase was unanimously shot down by all 50 alderpeople. But the mayor’s budget also calls for an increase of 34% for wholesale beer sales and roughly 35% for other spirits.
“The consumer is not blaming the City of Chicago or the mayor. They’re blaming me the restaurant owner—that it’s my fault because I increased it,” said Morgan. “But I have no choice. If I don’t increase it, we go out of business.”
The Distilled Spirits Council, a national lobby group, said Chicago already has some of the highest taxes on distilled spirits at $13.73 a gallon.
“Consumers are going to end up footing the bill,” said Ainsley Giglierano, vice president of public affairs for the Distilled Spirits Council.
The State of Illinois tax on distilled spirits is $8.55—which Chicago taxpayers pay on top of the local tax. The distilled spirits tax in Wisconsin is $3.25, and in Indiana $2.68.
“When prices go up, consumers are going to shop elsewhere—or they’re going to go to the bar just outside the city limits,” Giglierano said, “and that’s going to ultimately impact these local businesses.”
Steve Hartenstein is a restaurant owner and chairman of the Illinois Restaurant Association. He also fears what a spike to the cities liquor tax would mean for the industry.
“We’re the economic engine to every city and state in the hospitality world,” Hartenstein said. “It’s making it impossible to stay in business. Everybody’s got to make money.”
The City Council will continue to conduct budget hearings over the next few weeks, and the budget must be finalized by the end of the year.