January 20, 2010
In December of 2009, the Civic Federation released an update of its issue brief on Selected Consumer Taxes in the City of Chicago. The document includes descriptions of selected consumer taxes, recent changes in tax rates and explanations of how revenue from these taxes is distributed among local governments in Chicago.
The report highlights changes in taxation that occurred after July 1, 2008. Since then the most widely known consumer tax, the sales tax, has been amended by the Cook County Board of Commissioners. The county board voted to lower the County’s share of the sales tax by 0.5 percentage points, from 1.75% to 1.25% effective July 1, 2010. This change will lower the aggregate sales tax in Chicago from 10.25% to 9.75% provided that no new sales tax levies are created and no other government in Chicago changes its sales tax levy between now and July 1, 2010.
The Cook County sales tax change will also affect aggregate taxes rates levied on other goods subject to the sales tax on general merchandise and other consumer taxes. Taxes on prepared food in Chicago consist of the restaurant tax of 1.25% and the sales tax on general merchandise. Provided that there are no other changes in the sales tax or restaurant tax structures in Chicago, the total taxes paid on prepared food will decrease from 11.50% to 11.00% on July 1, 2010. Total taxes on motor fuels will also decrease with the reduction in the sales tax if no other government in Chicago changes its taxes on motor fuels. For the purposes of taxation, motor fuels are identified as diesel, gasoline and special fuel. Taxes on motor fuels are composed of the sales tax on general merchandise and aggregate tax rates of $0.50 per gallon for gasoline and $0.58 per gallon for diesel.
The amusement tax in the City of Chicago has also changed since July 1, 2009. The City Council increased its share of the amusement tax by one percentage point for both live performances and other events with the approval of the FY2009 City Budget. The change took effect on January 1, 2009. In Chicago, an Amusement Tax of 5% of admission fees and other charges is now applied for live theatrical, musical or other cultural performances with capacity over 750 persons. An 9% tax applies to all other performances and participatory events including movies, sports, amusement parks, circuses, pleasure boat rides, dancing, bowling, tennis, weightlifting, etc. Activities that are primarily educational rather than recreational are excluded. Initiation fees and memberships to health clubs are not taxed, but per-event or per-admission fees are taxed at 9%. Cable television is also taxed at 9%.
On September 1, 2009 taxes on alcohol increased with an amendment to the State’s alcohol tax approved with the adoption of the FY2010 state budget. The new rates per gallon are reflected in the following list: $1.16 per gallon of beer, $2.98 per gallon of liquor 14% or less in alcohol, $5.98 for liquor over 14% but under 20% in alcohol. The rates prior to the State increase in the alcohol tax were $1.12 per gallon of beer, $2.32 per gallon of liquor 14% or less in alcohol and $5.32 for liquor over 14% but under 20% in alcohol. The composite tax rate for liquor over 20% alcohol content varies depending on the proof of the alcohol. With the increase in the State alcohol tax rate the composite tax on 1 gallon of 100-proof alcohol increased from $22.68 to $26.73. The taxes on a 750 ml bottle of 80-proof liquor would be $2.14 in federal taxes, $1.69 in state taxes, $0.40 in county taxes and $0.53 in city taxes totaling a composite tax of $4.76.