Different sales taxes: border towns' problem
Leaders of Northwest suburbs fearful that a Cook County sales tax hike will drive business to collar counties say there's one thing they're not willing to do: Cut their own sales tax to keep that business.
In Schaumburg, an extra 1 percent sales tax the village levies under its home rule power brings in about $21 million annually, Village Manager Ken Fritz said.
"It would be difficult for us to get rid of that, since the village doesn't levy a property tax," he said. "We don't have a lot of choices."
More Coverage Video Border towns may feel tax crunch
Some Palatine officials, tired of having little say in county affairs, are exploring the possibility of seceding from the county. But that's a long shot, definitely not achievable by July 1, when Cook County's sales tax increase takes effect.
Meanwhile, Scott Lamerand, a Palatine councilman, said there's no way the suburb could give up its 1 percent home rule tax, either.
"It's critical to us to be able to supply our services that we have," he said. "It would take money away from the Palatine community so we could send it down to Cook County."
It would be unfair for the municipality to lower the sales tax when the county is raising it, Mayor Rita Mullins said.
"Because Palatine has that 1 percent tax, it lowers the property tax," she said. "We aren't reliant only on the property tax."
Mullins stressed that she is still waiting for a meeting with Cook County Board President Todd Stroger to ask what new services Palatine will get for the county's additional 1 percent tax.
But businesses fear a growing disparity between taxes in Cook County and those in adjoining counties will drive their customers across county lines, especially in border communities.
The difference between a carton of cigarettes in Palatine and Lake County is now about $20, partly because Cook has an additional cigarette tax.
Once the new sales tax hike goes into effect, Golden Tobacco store owner Bharat Shah says he isn't sure how much longer he will stay in business.
"People aren't going to shop here anymore," he said Tuesday.
Palatine resident Diane Sintille said that for her, a trip across county lines will be worth it.
"There's no reason to pay the extra money when you can just go up the street and pay less," she said.
The base sales tax in Cook County right now is 7.75 percent, in most of DuPage County 6.75 percent, in Kane County 6.5 percent, and in Lake County 6.5 percent.
In Cook County, 5 percent currently goes to the state, 1 percent to the RTA, 1 percent to the municipality, and 0.75 percent is a Cook County home rule tax.
After a state-approved increase in the RTA tax and the Cook County increase take effect, the tax difference between home-rule towns in Cook and non-home-rule towns in adjoining counties will be substantial.
For example, in Palatine, people will pay 10 percent in sales tax, while at the Deer Park Town Center, they will pay 7 percent. On a $1,000 computer that's a difference of $30. On a $10,000 dining room set, it's $300.
Only time will tell whether shoppers really will drive away from Cook County for cheaper prices.
Local government officials are still pondering what -- if anything -- they can do to keep money in their towns.
While officials aren't willing to consider abating their own sales taxes, they say they are working to find better options -- which could include starting a new county or joining a different one.
This week, village councilmen in Palatine again talked about their interest in seceding from Cook County.
Over the next few weeks, they'll look at whether it's viable to join Lake County or to even spearhead the start of a new Illinois county, both of which require voter approval of everyone in Cook County.
Palatine officials say they want to reach out to other neighboring towns near county borders to see if there's interest.
Schaumburg leaders say that since news of Palatine's public outcry over the new tax, their residents have urged them to follow in Palatine's footsteps.
In Wheeling, officials say there is concern about the tax hike. But Michael Mondschain, village finance director, said the town's home rule sales tax funds necessary programs.
On Lake-Cook Road, Wheeling businesses on the south side will pay 25 percent more in sales tax than those on the north side. The tax on purchases at the Wal-Mart will be 10 percent, while at the Target the tax will be 8 percent.
"I don't think Wal-Mart will be all that impacted. They seem to cater to a different group of people than Target does," Mondschain said. "I'm not sure that people are going to be that much aware of the difference in the sales tax rate."
Wheeling implemented its home rule sales tax gradually, adding a quarter-percent periodically over 10 years. The last increase was January 2006.
"As a result of what the county has done, that has made it difficult to have that happen in the future when your rate is already at 10 percent," Mondschain said.
Why businesses worry
Rising Cook County sales tax rates will drive shoppers to spend their dollars in collar counties, some businesses fear. How sales taxes will change July 1*:
Now July 1
Barrington
Cook 7.75% 9%
Lake 6.5% 7%
No home rule tax
Bartlett
Cook 7.75% 9%
DuPage 6.5% 7%
Kane 6.5% 7%
No home rule tax
Buffalo Grove
Cook 8.75% 10%
Lake 7.5% 8%
Home rule tax of 1%
Deer Park
Lake 6.5% 7%
Home rule tax of 1%
Hanover Park
Cook 8.25% 9.5%
DuPage 7% 7.5%
Home rule tax of 0.5%
Palatine
Cook 8.75% 10%
Home rule tax of 1%
Schaumburg
DuPage 7.5% 8%
Cook 8.75% 10%
Home rule tax of 1%
Wheeling
Cook 8.75% 10%
Lake 7.5% 8%
Home rule tax of 1%
*Cook County sales tax rates will increase by 1 point July 1. The RTA sales tax will increase by a quarter-point April 1 in Cook County and by a half-point in DuPage, Kane, Lake, McHenry and Will counties.
Source: Illinois Department of Revenue