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Aldermen have not yet had a full-blown discussion on City staff’s proposal to increase the City’s home-rule tax by .25%. Staff has put the issue on a fast track to meet an Oct. 1 filing deadline.
The City’s merchants, on the other hand, had plenty to say in their responses to an Evanston Chamber of Commerce survey.
The Chamber surveyed 71 businesses, seeking feedback.
The responses maintained a remarkably consistent tone, from one to 71.
• “The tax increase would stifle a lot of retail business and businesses looking to expand into large spaces,” said comment No. 1. “Most businesses that are being affected by Amazon and big box stores will be further hurt by this.”
• “We already have incredibly high taxes and expensive parking – Do we really need to do more to drive business away from Evanston?” said response No. 71.
Looking to close another expected budget gap, City officials proposed an increase at the Aug. 5 City Council meeting of the occupation tax and municipal service occupation tax (together known as the home-rule sales tax) from 1% to 1.25%. For the tax to go into effect on Jan. 1, 2020, the ordinance must be passed by the City Council and filed with the Illinois Department of Revenue by Oct. 1.
The tax is in addition to percentages taken out for retail sale items by the State of Illinois (6.25%), Cook County (1.75%) and the Regional Transit Authority (1%). The increase would bring the new combined sales tax to 10.25%.
Aldermen approved the ordinance for introduction Sept. 9 and are expected to act on the proposal at the Sept. 30 City Council meeting.
Staff is estimating that the quarter-percent increase would generate new revenue of $1.5 million for a full year, in addition to the $6.3 million the City currently collects. At the August meeting, City Manager Wally Bobkiewicz stressed that the City would not be recommending the move if communities such as Chicago and Skokie (both at 10.25%) were at a different rate.
But those responding to the Chamber survey and others maintain the increase will still hurt.
Certainly it will not help the City’s restaurant community, maintained Hecky Powell, owner of Hecky’s Barbecue and a member of the City’s Economic Development Committee.
“I mean, we work on small margins and we’re going to have to increase the cost,” he said.
He said competition against Chicago is not the only measuring stick. “You’ve got more people in Chicago than you have in Evanston.” Anyway, Chicago is not a good example, “because they may be facing bankruptcy,” he said, quoting a report.
“We’re also competing with Wilmette [a 10% total rate] and all those communities on the North Shore,” Mr. Powell said.
Evanston and Skokie may be at the same rate if Council approves the tax increase, but there are other considerations there too, he said.
“Take a look at Buffalo Wild Wings,” Mr. Powell said. “They left Evanston and went out to Old Orchard. You can park there all day and night and you don’t have to worry about meters.”
Mr. Powell said it is not the home rule sales tax alone. “It’s all these little taxes that add up. There’s another tax on signage; that adds to it. Then we’ve got the minimum wage, and it’s going up again.”
Sandy Chen, the owner-operator of Koi Restaurant, at 624 Davis St., said, “The more taxes increase, the more it just hurts people, hurts their dining experience.” At Koi, residents make up a large part of the clientele; students come out more on special occasions, she said.
Ms. Chen says the restaurant runs regular reports, showing the average check amounts per person, and they see fall offs among their regular clientele when prices go up.
In the restaurant business, “anything that changes, any kind of tax, even income tax,” can have an effect, she said.
Addressing the Council at the Sept. 9 meeting, Natsutsa Mabwa, a local resident, Chamber board member and president of ServiceMaster By Simons, shared with Council members some more details of the survey.
The Chamber surveyed 71 businesses to get some feedback. On the question, “Were you aware that the Evanston City Council is considering adoption of the ordinance, some 73.33% of the respondents said ‘No’; 25.71% said ‘Yes’; and .095% said ‘Not sure.’” she reported.
On the question “Are you in favor of this sales tax increase?”, the numbers were 72.38% saying “No,” 10.48% saying “Yes,” and 17.19% responding “Not sure.”
On “Do you think this tax increase will impact your business?”, 51.46% responded “It would hurt business;” 33.98% said “No impact” and 14.56 % said “not sure.”
She read a few more comments before Mayor Stephen Hagerty informed her that her public comment time was almost up:
• “The current 10% sales tax already causes ‘sticker shock’ for our customers.”
• “We already get questioned about our high sales tax from our many out of town guests.”
• The tax “is an unnecessary burden on retailers and restaurants who have to work exceptionally hard to compete with Chicago and Old Orchard competitors.”