Elburn Village Board adds new food and beverage tax

The Elburn Village Board this week voted to add a 1% tax on prepared food and beverages, whether from restaurants, grocery stores, or other businesses that sell prepared food.

Although several members expressed concerns, the vote was ultimately unanimous for an ordinance to add a 1% tax on prepared food and beverages. The tax is set to be effective on Dec. 1 of this year.

Village Administrator John Nevenhoven - searching for alternative funding sources for the village other than raising property taxes - had learned of other municipalities, including Pingree Grove, implementing a similar tax.

"This would not be directed toward property owners, but towards people who are out eating and drinking," Nevenhoven said.

Trustee Ken Anderson asked if Nevenhoven had discussed the proposed tax with the Chamber of Commerce members. Nevenhoven said that chamber members were, for the most part, service businesses who wouldn't be affected by the tax. But he added that he would be communicating it to them soon.

"I'm not a fan of raising taxes," trustee Chris Hansen said. "They tried doing this in Geneva, and it did not go well."

Nevenhoven said he had received a call from Ream's Meat Market about the tax and said they were generally OK with it. Using Ream's as an example, he said the additional tax would apply to hot food, prepared sandwiches, candy and alcohol but not to raw meat.

He said most places will already have a system set up for items that are taxed at a low rate and others at a higher rate, such as Jewel-Osco.

For a restaurant with seating, Nevenhoven said pretty much everything they would sell would be taxed at a higher rate.

"We're looking at [the consumer paying] $1 on a $100 meal," he said.

While it shouldn't be a hardship on the customer, the revenue the municipality could accrue could be substantial, he said. Pingree Grove, for example, was bringing in about $180,000 to $200,000 a year. In addition, the tax is locally administered, meaning that the revenue raised would be kept at the local level.

Nevenhoven said the village should identify a specific project the money would be used for.

Just as the additional 1% general sales tax the village implemented a few years ago, which goes toward maintaining the streets and parks, this revenue could be dedicated to a new municipal building.

Village President Jeff Walter said the tax could be eliminated after the building is paid for.