A controversial new proposal would raise taxes on beer, wine and liquor in Illinois as part of an effort to fund state infrastructure.
Gov. J.B. Pritzker announced this week that his plan would partly include an estimated $120 million from a tax increase on booze by the gallon.
Under the plan, the $8.55 per gallon tax on distilled liquor would rise to $12.60, making it the ninth-highest tax rate for spirits in the U.S.
For wine, the proposal would hike the tax to $2.05, making it the third-highest in the nation. Beer would face a tax hike of about 28 cents.
Pritzker said Wednesday he is confident that Illinois residents will swallow $1.8 billion in new and increased taxes to pay for a massive state construction program, while a key Republican said some of the taxes aren't acceptable and lawmakers may have to seek revenue from expanded casino gambling to finance the program.
The Democratic governor told reporters that the need for his six-year, $41.5 billion plan to build and repair roads , bridges, schools, parks and more is so apparent that taxpayers understand his proposals to double gas taxes and vehicle registration fees and suggested new taxes on video entertainment services and ride-sharing.
"There are bridges and roads and highways and waterways that are falling apart .... We need to advance the economic interests of the state," Pritzker said. "We've got a lot of work to do here. And I think everybody understands that."
Some in the restaurant, grocery, distilling and brewing industries say the tax would mess with their bottom line and could force them to serve that increase up to consumers.
The Illinois Retail Merchants Association says the beer industry alone generates $14 billion annually in economic output in the state. But when smaller breweries have to pay more in taxes, eventually they will have to pass the cost along to drinkers.
“Small breweries across Illinois are invested in their communities, creating jobs while supporting local charities, musicians and artists. They rehab vacant buildings and transform industrial corridors whether in Chicago or a small town like Petersburg,” Danielle D’Alessandro, executive director of the Illinois Craft Brewers Guild, said in a statement. “This proposed tax increase would mean an extra cost of $2,139 annually for a brewery producing 1,500 barrels, which helps cover the cost of healthcare for employees or new equipment to expand business.”
Pritzker's plan would raise $1 billion annually alone from increasing the motor fuel tax from 19 cents to 38 cents per gallon, and bumping the $100-a-year vehicle registration fee to $199 for cars less than three years old, with a sliding scale for older ones. Other big revenue producers are stickier, including a $1-per-ride statewide tax on each trip from a ride-share service, producing $214 million, and $150 million from a new, 7% tax on cable, satellite and streaming video services.
While new money from an overhauled income tax program would go toward Pritzker's promises such as paying off billions of dollars of state debt and stabilizing the bottom line, supporters say that taxes for a capital-construction program would produce much more visible results, making it an easier sell.