Preckwinkle Withdraws Amusement Tax Plan; Adds Hotel Tax Hike
Following criticism from a planned expansion of the amusement tax, Cook County Board President Toni Preckwinkle withdrew the proposal and introduced a new planned hike: a hotel tax.
On Monday, Preckwinkle introduced a plan for a 1 percent tax increase on hotels and motels rooms in the county. The hike would bring the total hotel tax to 17.39 percent in Chicago.
The tax would add $1 to a hotel room costing $100.
“Chicago is a world-class city and a major convention center and this should not discourage people from enjoying all our city has to offer,” Preckwinkle said.
The overall hotel tax would be below or comparable to cities, such as Indianapolis and Atlanta, Cook County officials said. The cost of a Chicago hotel room, including taxes, would be below New York, San Francisco and Miami.
According to county officials, the tax should not affect county residents directly because typically hotel and motel customers don’t live in the area.
But Marc Gordon, president and CEO of the Illinois and Lodging Association, said the tax plan could harm the city’s tourism industry.
“We are very concerned about this,” Gordon said.
He said two of Chicago’s biggest convention competitors – Las Vegas and Orlando – have much smaller tax rates. In Las Vegas, the rate is 12 percent, while Orlando is 12.5 percent.
“This puts us at a real disadvantage,” Gordon said.
Gordon said he fears if the city losses conventions because of the planned hike, layoffs would follow at hotels, eliminating good paying jobs.
“We are the economic engine to the area,” he said.
The tourism industry adds about $14 billion to the local economy, hotel officials said.
Last month, Preckwinkle announced that she wanted to expand the county’s 3 percent amusement tax to include cable television, bowling and secondary sales of sports tickets.
Preckwinkle expected that tax plan to bring an additional $22 million a year. It would have been used to help fill a $199 million gap in the county’s $4.5 billion budget.
She also announced $108 million in county spending reductions.
But Preckwinkle pulled back the amusement tax plan last week after receiving criticism. Some officials were concerned that such taxes might be burdensome for residents.
A vote on the budget plan is expected Nov. 18.
During the summer, Preckwinkle got approval for a controversial penny on the dollar sales tax hike.
In July, the Cook County Board passed a sales tax that increases to 10.25 percent. That increase is expected to raise about $475 million.
Preckwinkle said the tax hike was needed as the county struggles with a $6.5 billion pension liability crisis. Most of the proceeds would be placed into the county pension fund, she added.
A smaller portion of the money would be used for infrastructure and roads, as well as for paying down debt.
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