Chicago Sales Tax Rate Increase: Part 2

September 19, 2007

A Cook County Commissioner is proposing to raise the sales tax again. Cook County contains Chicago, and we blogged about Chicago’s sales tax rate a few years back: Chicago Sales Tax Rate Increases.

From WLS-TV Channel 7 Chicago:

One Cook County commissioner wants to increase the county’s portion of the sales tax, and if approved, the sales tax in Cook County would go up to 11 percent.

The proposal asks for increases in service and sales taxes. To retailers in Chicago, that means a sales tax would go from nine percent to 11 percent. Some are concerned that an even greater tax will send tourists and shoppers elsewhere.

The 9 percent rate shoppers in Chicago pay is already among the highest in the nation. Adding 2 percentage points to the rate will only provide additional incentives for shoppers to make their purchases elsewhere. Apparently the commissioners don’t feel the rate will drive shoppers elsewhere:

The commissioner said it would have little effect on the bottom line for retailers and restaurants and hotels.

“Cook County is a destination place,” said Cook County Commissioner Joan Patricia Murphy. “We have great conventions and conferences here. That’s not a back-breaking increase.”

The commission is greatly underestimating the impact the internet has since the 11 percent tax can be completely avoided by making purchases online.

What is more, they are underestimating the competition for conventions. Cities compete for conventions like they do for businesses– if not more ferociously. Cook County is handing cities across the country a talking point when they make their pitch to attract conventions.

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