Lincolnshire may start local sales tax

Shoppers at stores and restaurants in Lincolnshire would pay more sales tax starting in 2011 under a proposal being considered by the village board.

Village leaders are considering creating a 1/2-percent local sales tax on virtually all goods sold in town.

The current sales tax on most retail purchases in Lincolnshire is 7 percent, according to a state revenue department website. The bulk of that revenue goes to the state, Village Manager Bob Irvin said.

If approved, the local sales tax could generate about $1 million in new revenue annually for Lincolnshire, Mayor Brett Blomberg said.

Many suburbs collect local sales taxes, and some counties do, too. A 1/2-percent local tax on top of the existing rate would "still keep us below our surrounding communities," Blomberg said.

The proposal was discussed Monday night during a committee-of-the-whole meeting. No final decisions were made.

The tax was proposed as a revenue-generating idea. Lincolnshire survived the recent recession in better shape than some other suburbs, but it still reduced staff and services to save money, Blomberg said.

Additional money-saving cuts would significantly affect services, he said.

Blomberg likes the idea of using sales tax to generate additional revenue because it wouldn't just apply to local residents or property owners, as a property-tax increase would.

"We're still in good shape, but we also see what's happening (with revenue)," Blomberg said. "So this is the most fair way to do it."

If the economy recovers, the new tax would help build the village's financial reserves, Blomberg said. Eventually, it could replace the village property tax, which raises money for the retirement funds for police and village officials, Blomberg said.

The board could again discuss the planned tax on Sept. 27, and the panel could vote on the plan that night.

If approved, the new tax likely would become effective early next year. A three-month delay is needed so state officials can notify local businesses of the new tax, Blomberg said.