Mayor Lori Lightfoot (D) will propose a tax hike on all food and drinks sold in Chicago restaurants to help shrink a massive estimated $838 million shortfall in the 2020 budget.
The proposal would double the current .25% tax on food and drinks sold at retail establishments and restaurants, the mayor’s office said. Aldermen will need to approve the increase, which would kick in Jan. 1.
Lightfoot anticipates the increase brings in an extra $20 million in 2020, according to her administration.
“As part of a number of revenue solutions we are contemplating, we are asking those dining out to chip in an additional 25 cents for every $100 restaurant tab,” Lightfoot said in a statement. “These and other responsible solutions will help the city secure dedicated revenues which are necessary for repairing our financial challenges in 2020 and for the long term.”
The tax Lightfoot wants to raise is but a fraction of the levy Chicago diners pay every time they eat out. The sales tax in Chicago is 10.25 percent, one of the highest in the nation. The current .25 city tax is on top of that, as is a 1% food and beverage tax for the Metropolitan Pier and Exposition Authority that is levied at downtown restaurants as well as the two airports.
The proposal precedes Lightfoot’s Oct. 23 budget address, when she’s expected to explain how she plans to fill the gaping deficit.
Dating to her campaign for mayor earlier this year, Lightfoot has repeatedly promised to cut expenses wherever she could before seeking to raise politically unpopular taxes.
But the city’s gargantuan shortfall is large enough that some increased taxes will be necessary, as the mayor has previously acknowledged.
This week, Lightfoot began trickling out details of her plan. On Friday, the mayor said she will seek to more than triple the tax charged on most solo ride-share patrons heading in and out of downtown Chicago as part of a plan to bring in $40 million more a year.
Lightfoot’s plan to bring in new revenue and curb traffic congestion would also hike the tax on solo riders using services such as Uber and Lyft elsewhere in the city by 74%.
The administration has said it would need help from state legislators in the upcoming fall veto session, including a potential increase in the real estate transfer tax on expensive homes, but it’s not clear how much help the legislature will provide.
Lightfoot has expressed reluctance to raise property taxes, but has repeatedly said that possibility remains on the table.
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