Chicago’s restaurants are pulling together to swat down a proposal from Mayor Brandon Johnson to raise sales taxes on alcoholic beverages by at least a third.
The plan, a revenue-generating measure included in the mayor’s 2025 budget, would saddle the city with the nation’s second highest municipal sales tax on wine and spirits and the seventh highest levy on beer. It is expected to generate another $10 million in tax proceeds.
Proponents say the hikes are intended to be passed along to customers, preserving the margins of local restaurants and bars. But operators counter that they’re likely to feel the impact on their top lines as patrons balk at the steep increases in drink prices, which would come on top of a continuing spike in the local cost of living. The Consumer Price Index for the Greater Chicago area is already running about 3.8% above its level of a year ago.
They also contend that more business will shift to restaurants outside the city limits, an exodus some say is already underway as a result of the city’s tip credit being phased out. Full-service establishments within the Windy City say the rollback of the payroll break has already raised their labor costs by about 16%, making restaurants a few blocks or miles away more attractive pricewise.
The city also recently mandated that restaurants and other employers provide staff members with at least 10 days of paid leave.
The lower prices offered outside the city would prompt Chicagoans to buy 400,000 more bottles of booze and 18,000 additional cases of beer from establishments elsewhere, according to research conducted for the trade group Wine & Spirits Wholesalers of America.
The data from John Dunham and Associates also projects a loss of 1,000 jobs within Chicago proper. Overall, it concluded, the tax increases would cost the city about $102 million in economic activity.
The Illinois Restaurant Association is beseeching members in Chicago to lobby their city representatives for a “No” vote on Johnson’s proposal. “We can’t afford another tax increase!” it declared in the most recent communication posted on its website.
Johnson has called for sales-tax increases of 34% on beer, to 39 cents per gallon; 36% on wine, to 49 cents per gallon; and 34% or 35% on spirits, to $1.20 or $3.62 a gallon, depending on the proof.
The mayor has already shown he’s willing to temper some provisions of the prospective budget he submitted at the start of the month, including a controversial suggestion that property taxes be significantly hiked. But he’s yet to comment publicly about the restaurant industry’s concerns.
Johnson’s relationship with his city’s celebrated restaurant industry has been strained before. Last year, at the former teacher’s instigation, the City Council voted to phase out the city’s tip credit by July 2028. The move was widely seen as a concession to the Service Employees International Union, or SEIU, which was instrumental in getting Johnson elected. The law eliminating the credit was even named the One Fair Wage Law, after the SEIU affiliate that led the effort to kill it.
Additional hearings on the new budget are expected to be held in mid-December, an exceptionally late date for considering the city’s new fiscal plan.
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