Chicago businesses oppose Mayor Johnson's proposed liquor tax hike in budget plan

CHICAGO (WLS) -- Chicago Mayor Brandon Johnson has another budget fight on his hand, this time over his proposed tax hike on alcohol.

On Wednesday, a committee held another hearing for the mayor's proposed budget plan.

The hospitality industry is calling on the Chicago City Council to reject the increase, which is expected to raise an additional $10 million.

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One proposal for fixing the city's nearly billion-dollar budget hole is to tax liquor sales even more, but some in the Chicago hospitality industry say an increased alcohol tax would drive customers out of the city and into the suburbs.

"We already pay, among the hospitality industry, the highest beverage taxes in the whole Midwest and some of the highest in the country," Pat Doerr with the Hospitality Business Association of Chicago said. "City Hall's proposed tax increase would make us the second-highest taxes on the enjoyment of beer, wine and spirits in the whole country."

The restaurant and bar industry, which is already a low profit margin business, is now really feeling in poor spirits with the mayor's proposed tax hike on alcohol.

"I think that it's just going to keep more people, you know, out of the bars and spending money," Fifty/50 Restaurant Group co-owner Scott Weiner said. "So ultimately, I think it's going to hurt us from a sales tax perspective, and it's going to hurt us in a number of ways that we just we're just not ready, nobody can absorb right now."

The mayor's plan to raise an additional $10 million from higher alcohol tax would amount to adding just pennies to a drink served at a bar, his administration says. The hospitality industry says it can't afford any new tax after feeling the pinch from the rise in labor costs this year because of the increase for tipped workers.

"City Hall is trying to balance the budget by throwing ours out of whack," said Mark Robertson with Two Bears Tavern. "Ours have always been out of whack since COVID, none of us have ever recovered from that."

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"Retailers of all sizes, from convenience stores to restaurants and taverns who are already struggling, will lose key sales, making it even harder for them to stay afloat," said Michael Harris with the Illinois Retail Merchants Association.

Many in the industry said it could cause the city to lose sales tax revenue if people decide to dine or shop over the border.

"What we are asking today is for city council to acknowledge the tough straits our industries are in and these heavy level of taxation these products already have, and to say no to the proposed 35% alcohol tax increase," Doerr said.

The mayor defended the proposed tax Wednesday afternoon.

"This is a modest consideration," Johnson said. "We're just simply looking at raising the tax that would keep up with inflation, and we don't even have the highest tax on alcohol than others cities throughout the state of Illinois."

The hospitality industry says it will take the fight to City Hall next month, adding it cannot support even the smallest increase on the tax on alcohol.