On Tuesday, ATR reported on the Illinois legislature’s massive tax hike on alcohol, soft drinks, and candy. Now the bill containing $600 million in new annual taxes has landed on Governor Pat Quinn’s desk. The backroom deal struck by legislators would raise the tax on distilled spirits by 90%, wine by 90%, and beer by 21%.
Gov. Quinn has rightly stated his reluctance to such tax increases on the hospitality industry, especially as the city vies to host the 1016 Summer Olympics. However, your help is needed to urge him to veto the bill.
Illinois residents, CLICK HERE NOW to write Gov. Quinn and urge him to veto HB 255.
See below for ATR’s letter to the Governor requesting his veto of this onerous tax increase or click here for a PDF copy.
The Honorable Pat Quinn
Governor, State of Illinois
207 State House
Springfield, IL 62706
RE: Vote Request for House Bill 255
Dear Governor Quinn,
I write to urge your veto of House Bill 255 that would dramatically raise taxes on alcohol beverages, soft drinks, and candy. This bill will likely do little to raise the estimated hundreds of millions of dollars in new revenue, but it will hit retailers and the hospitality industry the hardest.
HB 255 would raise the tax on distilled spirits by 90% to a staggering $8.55 per gallon. Similarly, the tax on wine would rise by 90% and the tax on beer by 21%. Additionally, the amendment would restructure the tax code to raise taxes on soft drinks and candy.
These tax hikes will almost certainly result in lower tax revenue for the state as consumption naturally declines. Just this week, Kentucky announced that after applying the state’s 6% sales tax to alcohol beverages earlier this year, total tax revenue dropped by over $1.7 million and was 55% below last year’s revenue at this time. Similarly, tax revenue from wine consumption in Kentucky dropped by more than $75,000. Furthermore, the last time the federal government raised the distilled spirits excise tax, it took 11 years to bring in more revenue.
This tax increase will result in increased smuggling of alcohol products across state lines. Illinois already has alcohol beverage taxes nearly double that of all neighboring states – even without the tax hike. This proposed tax increase will push the tax on distilled spirits to nearly 4 times that of Illinois’s neighbors and will result in significant smuggling across the borders – harming tax revenue and retailers alike.
If Illinois needs to raise money for capital infrastructure improvements, it should undertake privatization projects similar to that employed by the City of Chicago and the neighboring state of Indiana. In 2005, Chicago leased the Chicago Skyway landing the city $1.8 billion in new funding and allowing them to pay off debt and use the money for other operating costs. Similarly, in 2006, the Indiana Toll Road was leased for an upfront payment of $3.8 billion. Privatization projects would invest in infrastructure, create jobs, promote economic growth, and bring billions into the state’s coffers – all while avoiding unnecessary tax increases.
As you have rightly stated your reluctance to raising these taxes, I urge you to stand up for consumers and small businesses to veto the distortionary and excessive tax increases in House Bill 255. If you have any questions, please contact Kelly Cobb, state affairs manager, at (202) 785-0266.