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Business groups joining against governor’s gross-receipts tax plan

November 17, 2010

Business groups in Illinois continue to mobilize against the governor’s plan to impose a gross-receipts tax that many insist would be a death knell for commerce and heavily burden consumers as the end users of products and services.

 

In seeking support for his controversial measure, Gov. Rod Blagojevich on March 30 offered $1 billion in property tax relief by increasing the tax rate he first proposed for the gross-receipts tax. But few state lawmakers publicly supported the original idea, and it is questionable whether they would embrace the new plan at even higher rates.  

Under the now $7.6 billion proposal, businesses would be taxed 0.85 percent on any merchandise they sell and 1.95 percent on any service they perform. Blagojevich first sought to raise $6 billion in new money with assessments of 0.5 percent and 1.8 percent, respectively.

 

The Chicago Automobile Trade Association has joined an alliance, the Illinois Coalition for Jobs, Growth & Prosperity, and is helping to fund a $1.8 million television and radio campaign to derail Blagojevich’s plan with messages that the levy ultimately will be borne by individuals, not by large corporations, as the governor has portrayed the tax. 

The CATA also is participating with the Illinois Chamber of Commerce and other groups in several forums with state lawmakers, including in Downers Grove on April 16, where the public can convey their impressions of the gross-receipts tax to state legislators.

 

Many local governing boards have weighed in on the measure. The Cook County Board is debating a resolution that urges Blagojevich "to abandon this draconian tax proposal and work with members of the Illinois General Assembly to devise a more practical means of funding state operations."  

Industry analysts estimate that hundreds of franchised new-vehicle dealers in Illinois would be forced to close by a tax that comes off the top of what an employer takes in, whether the company is making a profit or losing money. Dealers are urged to contact their state lawmakers to share their concerns of the impact.

 

The CATA on March 29 mailed its dealer members a worksheet for them to calculate how much a gross-receipts tax would impact them. Dealers could turn to their state lawmakers with real numbers about the impact. The CATA also offered sample letters that dealers and their employees can send to their representatives in Springfield. 

Workers must emphasize that if their company closes, they will lose their job and their employer-supported health care. Also, although the tax is being sold to the public as one that only impacts big businesses, the costs of the tax will be passed along to consumers regardless of income, thus making it a regressive tax that hurts everyone, particularly those with limited means.

 

State senators and representatives are in recess this week and likely can be reached at their district offices. Lawmakers and their contact information can be found through the CATA Web site. From the site’s home page, http://cata.drivechicago.com, see "Legal/Legislative" along the black bar at the top of the screen. From the category’s drop-down menu, click "Who’s My Legislator?" The subsequent link to the Illinois State Board of Elections enables searchers to enter a street address to identify their elected officials.  

Several states over the years instituted a gross-receipts tax, although their scope and size were a fraction of what Illinois would collect. Nearly all the other states have since retracted the policy of taxing each time a business takes in revenue, regardless of profitability.

 

"This is pretty cool for Indiana," said John Mikesell, professor of public finance at Indiana University. "A lot of us are rooting for Illinois to pass the thing because there will be so many opportunities to study the adverse impact on the Illinois economy."

 

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