After City Council unanimously rejected his $300 million property tax hike proposal last month, Mayor Brandon Johnson now faces tough decisions to address Chicago’s nearly $1 billion budget deficit for 2025.
One idea being floated by city leaders includes increasing liquor taxes, a move that could have adverse effects on locally owned restaurants in Chicago.
According to CBS Chicago, the mayor’s budget plan proposes a 34-35% tax hike on wholesale beer and spirits. This would add to Chicago’s already hefty liquor taxes, currently among the highest in the country at $13.73 per gallon for distilled spirits.
What does this mean for your favorite neighborhood bar and grill? For restaurants operating on razor-thin margins, increased operational costs often trickle down to the consumer, resulting in higher menu prices, mandatory service fees, and other expenses.
Tax hikes often hit small businesses and restaurants the hardest, creating an environment where only large national chains are able to viably sustain themselves. This begs the question, is a Chicago where only Starbucks and Taco Bell Cantinas can thrive even Chicago at all?
The fate of Chicago’s hospitality sector hangs in the balance as negotiations on the 2025 budget continue. City council must present a finalized budget by the end of the year.