Earlier this month, Chicago City Council began discussing proposals for the city’s fiscal year 2025 budget, including a 34-36% increase on beer, wine, and spirits. The proposal would break down as follows:
- 34% tax increase on beer.
- 36% tax increase on liquors other than beer with less than 14% ABV,
- 34% tax increase for liquors between 14-20% ABV.
- 35% tax increase for liquors with more than 20% ABV.
This budget proposal devastatingly impacts Chicago’s hospitality industry - one of the city’s largest private sector employers. In the wake of inflationary measures at bars and restaurants (+3.8% in the Chicago area), Chicagoans may be less likely to continue spending on eating out and enjoying an adult beverage should the proposal go into effect. This could impact the profit margins of Chicago’s family-owned restaurants, bars, nightclubs, and mom-and-pop liquor stores who are already struggling with the financial implications of new paid time off rules and an increased minimum wage law.
Recent economic analysis by John Dunhum and Associates (JDA) suggests that the increased tax burden on beer, wine, and spirits could result in almost 1,000 Chicagoans losing their jobs and a potential loss of $40 million in wages. Such impacts would contract the city economy by nearly $102 million.
Chicago residents already pay one of the highest alcohol taxes in the region, and some of the highest in the entire country. Consumers, therefore will have plenty of incentive to leave the city in order to purchase alcohol at a lower cost - as was seen when Cook County enacted its sweetened beverage tax just a few years ago. In total, JDA estimates that cross-border sales will total over 400,000 bottles of wine and spirits and 18,000 cases of beer - all resulting in lost revenue for the city economy.
Moreover, those who don't turn to cross-border sales may wade into unregulated sources, fueling an illicit market. Not only will businesses further suffer from these lost sales, but it also increases public safety concerns as such sales lack proper oversight and increases the risk of crime, underage access, and health hazards from unregulated products.
We would urge the Chicago City Council to reconsider this proposal and work with local businesses to find solutions that help their community thrive in a vibrant economy. need to work towards a more equitable solution that addresses the root causes of Nebraska’s high property taxes without disproportionately impacting ordinary citizens.