TAX INCREASES SHOULDN’T BE A SURPRISE
If you don’t think it’s a good idea for Cook County to raise taxes on sugary drinks or hotels, you can tell that to commissioners at one of their four public hearings on the new budget.
Oh, wait. Those taxes haven’t even officially been proposed yet, but three of the four public hearings already have been held. The fourth is scheduled for Thursday. So much for your input.
This is no way to go about setting tax policy. Local governments need to do a better job of coordinating new taxes and fees so they don’t disrupt the economy.
To get next year’s budget in balance, Cook County Board President Toni Preckwinkle originally proposed expanding the county’s share of the amusement tax. That would have given Chicago the highest combined taxes on cable TV in the country because Chicago already has an amusement tax.
Now, facing resistance from county commissioners, Preckwinkle is abandoning the amusement-tax expansion. Instead, the county is now looking at all options, a spokesman said. Reportedly, what’s under consideration are higher countywide taxes on sugary drinks and hotels. But Chicago already has a hotel tax, and the city depends on convention and tourism business, which can be affected by how much various governments tack on to hotel bills. In 2012, the Wall Street Journal calculated Chicago had the highest travel-related taxes in the country.
Is it plausible that the economic implications of a higher hotel tax will be thoroughly vetted before the County Board signs off on its budget in two weeks? Already, starting next year, downtown Chicago will have the highest sales tax in the nation following a vote in July by the County Board to increase its share of the sales tax.
Cook County Commissioner John Fritchey on Tuesday called for a 1 percent budget cut instead of raising taxes. But with just two weeks to go, there isn’t much time to figure out how to find savings, either.
It’s no mystery how we got here. Underfunded pensions are stressing government on every level, from city to county to state. More money will be needed to fix the pensions. That’s why the Chicago City Council just approved a big property-tax increase, along with expanded garbage fees, a new ride-hailing charge and a new tax on streaming services, such as Netflix.
But that doesn’t mean it’s a good idea to add new taxes in a hurried or uncoordinated way. That’s how you wind up with unintended consequences, perhaps with job losses.
Before raising or imposing new taxes that affect the region, leadership should sit down and talk. It might avoid some unnecessary shocks to the local economy.