A proposed tax increase on alcohol in Chicago has sparked significant debate, with potential impacts that could ripple across the city’s beverage industry. Mayor Brandon Johnson’s plan to raise alcohol taxes by more than 34% has drawn sharp criticism from distilleries, bars, restaurants, and advocacy groups, all of whom fear the consequences for businesses, workers, and consumers.
For a city already known for its high alcohol tax rates, this proposed increase would elevate Chicago’s combined state, county, and city taxes on spirits to 2.6 times the average rate of comparable cities. Nearly 56% of the retail cost of a typical bottle of distilled spirits already goes toward taxes or fees, making it clear that any further increase could be burdensome for both businesses and customers.
Local businesses are at the forefront of this issue. Koval Distillery, a Chicago-based company, expressed deep concerns about how such a tax hike could affect operations. With more than half of their revenue already dedicated to taxes or fees, an additional 34% increase feels unsustainable. These businesses are more than just economic contributors—they are part of the culture and character that attract people to Chicago. Losing them would mean losing a piece of what makes the city unique.
The economic analysis by the Distilled Spirits Council of the United States (DISCUS) sheds light on what could happen if this proposal becomes reality. Their report estimates over $25 million in lost alcohol retail sales and the elimination of 300 jobs across the city. Such losses would likely extend beyond just the beverage industry, affecting restaurants, bars, and the overall hospitality sector. As prices rise, many customers may choose to take their business to neighboring areas with lower taxes, further straining Chicago’s economy.
It’s not just about dollars and cents. Many in the hospitality industry feel they are already doing more than their fair share to support the city’s revenue needs. Bars and restaurants have been grappling with higher operating costs, inflation, and a slow recovery from the pandemic. Adding another financial hurdle to their path could force some businesses to shut their doors entirely, leaving their employees and communities to bear the burden.
The pushback isn’t just from the industry. Members of the Chicago City Council, who recently rejected another significant tax hike, have voiced their concerns. Some alderpersons, particularly those representing border wards, worry that this increase will drive residents and visitors to spend their money outside the city limits. The fear is not just lost sales but the broader perception that Chicago is becoming less business-friendly.
As the city works toward finalizing its budget, this debate serves as a reminder of the delicate balance between revenue generation and economic sustainability. The final decision on the tax increase will reveal whether Chicago can address its fiscal challenges without jeopardizing the businesses and people who contribute to its vibrant culture. For now, all eyes are on the city’s leadership to find a path forward that supports everyone involved. Tax increases in Chicago’s beverage industry
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