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MADISON - ST. CLAIR RECORD

Thursday, April 25, 2024

Ed/Glen Chamber points to impact on business with 1 percent CSFT tax increase

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The Edwardsville/Glen Carbon Chamber of Commerce has weighed in on the proposed 1 percent County School Facilities Tax (CSFT). And while the organization has not taken an explicit "anti" position, its analysis leans that way.

In an advisory emailed to members on Monday, the Chamber indicated it had engaged with retailers and others who identified "numerous areas in which a sales tax increase affects business." It listed the following:

-Loss of competitive advantage by continued sales tax increases;

-Reliance on sales tax in a time where brick/mortar retail landscape is evolving;

-Loss of local sales to online competition;

-Consumers choosing to shop elsewhere (e.g., Missouri) for expensive items, such as furniture and jewelry;

-Negative impact on discretionary spending by residents and customers; and

-Regressive tax negatively impacting fixed-income or value-conscious residents and shoppers.

While the sales tax would not apply to groceries, prescription drugs, over-the-counter medications, farm equipment/farm inputs, cars/trucks, ATVs, boats, RVs, mobile homes, labor and services, it will apply to most every other item, including gasoline.

A spokesperson for a group most vocally opposed to the increase - Madison County Citizens for Sustainable Education - said the increase makes businesses "even more vulnerable to people crossing state lines for lower prices."

"What signal are we sending to businesses and consumers, when we already have some of the highest property taxes in the nation, and now we’re aiming to have the highest sales taxes in the country as well?" said Nancy Moss for the grassroots group opposed to the increase, in a letter to editor. "Gas prices and sales taxes are already less in Missouri, and this would just increase the disparity."

The CSFT was enacted by Illinois lawmakers in 2007, authorizing elected school boards to present sales tax referendums of up to 1 percent to county voters. In two previous attempts, Madison County voters have rejected the CSFT - overwhelmingly by a margin of 81 to 19 percent in 2011 and narrowly by a margin of 50.3 to 49.7 percent in 2017.  

If passed, the sales tax increase is expected to raise $23 million that would be used to fund costs of capital improvement projects and to fund school construction debt.

Proponents say that its passage would be a "win-win" for communities as it would add revenue for important projects, be paid for in large part by visitors from outside the county and go toward property tax relief.

Mark Cappell, superintendent of the Alton School District, said that 50 percent of revenue raised would go toward providing property tax relief.

But Moss claims that there are "no examples around the state of school districts following through on the promise to lower property taxes if this new sales tax is passed."

"Many local school districts have also promised to use a portion of the estimated $23 million in revenue from the tax to lower property taxes," she said. "However, nothing in the law requires school districts to lower property taxes with the revenue, and there are no provisions to hold school boards to their promises."

"In fact, in 2009, when the 1 percent sales tax was on the ballot in Champaign County, all 13 school districts in the county promised to lower property taxes with a portion of the revenue. However, five years later, 12 of the 13 school districts had broken their promises and had actually raised property taxes by an average of 22 percent."

In its communication with members on Monday, the Edwardsville/Glen Carbon Chamber noted a "significant number of tax increases and changes" implemented last year that could impact businesses and available discretionary spending of residents and customers. It listed the following:

-ECUSD#7 Proposition E property tax increase impacting property taxes payable for 2018;

-Illinois personal income tax increase: 3.75 to 4.95 percent;

-Illinois corporate income tax increase: 5.25 to 7.0 percent;

-Illinois expansion of sales tax definition: Sales tax definition expanding to include previously non-taxed services, such as landscaping; and

-U.S. federal tax reform: Substantial tax reforms impacting numerous areas.

The Chamber also cited research conducted by the Illinois Policy Institute which indicates that if voters approve the CST on March 20, sales taxes in Collinsville and Granite City would rival what's imposed in Chicago - which has the highest rate among large cities.

Moss pointed out that if a recession hits and sales tax revenues go down, then property tax payers would be left to shoulder shortfalls. She said that's because if sales tax revenue are insufficient to make payments on bonds, school districts are required to raise property taxes.

"That’s why we have to read through the fine print and put the claims of 'lower property taxes' into proper context," she said. "It’s laughable that someone would claim that they need to raise our taxes in order to lower them. If it sounds too good to be true, it usually is."

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