Tax hikes could drive away Chicago shoppers
March 10, 2008
CHICAGO – Chicago has been a regional shopping magnet for at least a century, but soaring sales taxes, which would be the highest among major U.S. cities, could begin to repel increasing numbers of shoppers, some economists say.
Higher sales taxes come after the Cook County Board voted earlier this month to double the county sales tax to 1.75 percent, which will raise the city’s cumulative rate to 10.25 percent.
That rate is one of the highest for any major U.S. city, compared with rates in New York and Los Angeles that are below 8.5 percent.
Economists and retailers say the increases may encourage shoppers to do more shopping online. Shoppers may even be tempted to cross county or state borders to shop.
Chicago resident Patti Jo Mitchel drove to Indiana to save $32 on a $1,075 laptop.
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“On a big-ticket item like this, I figure it’s worth it,” she said.
Experts say it’s too soon to say how big or small the impact will be.
Michigan State University economics professor Charles Ballard said that Cook County’s government was essentially experimenting.
“If they raise the rate but don’t lose a lot of business, they’ll get a lot of revenue,” he said. “On the other hand, if everyone flees to do their shopping, you could lose revenue.”
Cook County isn’t the only one contributing to high sales tax figures.
Illinois legislators started the increases in January by approving a 0.25 percentage-point increase in Cook County and a 0.5 percentage-point rise in the counties around Cook to help pay for ailing mass transit. Those increases take effect April 1.