A closer look at Prospect Heights' new restaurant tax

"Every city around us has this tax," Prospect Heights Alderman John Styler summed up at a recent meeting where the city council approved a new food and beverage tax.

The new 1.5 percent tax applies to all food and alcoholic and nonalcoholic beverages sold at any of the roughly 30 sit-down restaurants in town. The city ordinance allows restaurant owners to pass on the cost to customers.

Each restaurant owner is required to register with the city administrator by June 1. Failure to pay the tax could result in court action. Fines for violating the ordinance could range from $200 to $750 for a first offense, and $500 to $750 for each additional offense within 180 days.

City officials anticipate the new tax could generate about $240,000 yearly in additional revenue to ease the strain on city finances.

It's one of the few tax increases even non-home rule municipalities are allowed to impose without having to ask voters through a referendum, Mayor Pat Ludvigsen said.

"It's our financial situation that necessitates this," he said. "We have very, very few places that we can generate revenue from, unfortunately. And this is one that's come about because of a recent change in what's allowed to be taxed for food and beverage."

Though the tax was unanimously approved by the council, Alderman Richard Hamen was concerned about how the tax would affect "the little guys" with smaller eateries scratching out a living.

Yet, he acknowledged the tax should have been imposed years ago considering the city's current financial situation.

Ludvigsen stressed it's not a tax on the businesses.