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New Cook County 1% tax hike on general merchandise, not cars

November 16, 2010

Chicago sheds its Second City moniker on one front July 1, when its sales tax rate becomes the nation’s highest on general merchandise.

The city’s new 10.25 percent sales tax is part of a measure passed in February to avert a Cook County government shutdown. But the 1 percent countywide sales tax increase does not apply to vehicles, so showrooms and parts departments effectively will have different tax rates. Food and medicine also are unaffected by the tax hike.

The tax on all general merchandise sold in Cook County increases 1 percent. The new state and local combined rate will be preprinted on Line 4a of Form ST-1, Sales and Use Tax Return; or Form ST-2, Multiple Site Form, as a total general merchandise rate.

The Cook County Board measure that more than doubles the county sales tax—to 1.75 percent from 0.75 percent—gives Board President Todd Stroger the cash to hire more than 1,000 new employees and close the county’s projected $234 million deficit.

"Good government is when the right thing happens. So, today is good government," Stroger said after the 10-7 vote in February.

Indeed, Stroger settled for a smaller sales-tax increase than he originally sought. Critics also say in the process, which was often marred by bitter personal attacks, that Stroger lost his credibility as a manager by raising taxes rather than instituting reforms.

"As a result of a lack of a reasonable financial plan we’re going to raise taxes and jeopardize the economic vitality of the Chicago region," said Laurence Msall, president of the Civic Federation, a fiscal watchdog group.

Msall said the county’s increase is four times greater than the sales-tax increase granted to the Chicago Transit Authority, which agreed to a series of "comprehensive and historic" reforms.

"There is no reform tied to this," said Msall. "There is nothing here the taxpayers can look forward to. Nothing in this budget that gives the Civic Federation confidence that the millions collected [under the tax increases] are going to be spent any differently than the other $3 billion in the budget."