Tax hike on alcohol, candy and pop

August 31, 2009 (CHICAGO) The state's sales tax is going up to help pay for a massive project to build roads and schools. But the breakdown of the tax increase and which products are affected can be confusing.

In some cases, the taxes will level the playing field in the cost of similar products with different prices. But in others, the tax increase means consumers will have to dig deeper to pay more for items they use everyday.

"I think it's ridiculous. No more taxes," said Jeanette Krenek.

Some of the candy Krenek bought on Monday will cost more on Tuesday when another round of tax increases takes effect.

The state tax on candy will go to a higher rate, up from 1 percent to 6.25 percent unless it needs refrigeration or contains flour. That leaves the owner of Candyality literally reading every ingredient of her entire stock of candy to see which is eligible for the new tax.

"It just is one more hurdle to jump in a really long year of a really hard and tough economy and a tough business," said Terese McDonald, Candyality.

A new classification for medicated hygiene products, like shaving creams and shampoos, now makes them eligible for the 6.25 percent state tax. And non-carbonated sweetened drinks, like iced tea, will be taxed as much as soda.

"Sometimes a few extra cents is like, whatever. But when money's tight, those few cents can make a difference," said Alejandro Salinas.

Higher state taxes are also on tap for alcohol. The state will raise taxes for distributors and then those companies will decide whether they'll pass that cost on to the consumer. If they do, a case of beer could jump about 10 cents; a bottle of wine 13 cents; and a fifth of spirits: 81 cents.

The president of the Illinois Retail Merchants Association says the price increase might prompt customers to buy alcohol elsewhere.

"We have more borders than virtually any other state in the nation and because all those states around us have lower taxes, we're going to start seeing migration of sales," said David Vite, ill. Retail Merchants Association.

The tax increases should generate, after a year, about $150 million toward a $30 billion roads and schools building plan.

The Illinois Department of Revenue also says it's a fair way to also create desperately needed jobs.

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