In the wake of the “grand bargain” budget plan failure, an Illinois politician has proposed applying the 6.25 percent state sales tax to a broad range of services.
The Illinois Senate’s “grand bargain” budget plan failed to advance March 1, and now politicians have returned to the drawing board.
The latest proposal: Expanding the sales tax to apply to tattoos, private detectives and many other services the state does not tax currently.
State Sen. Toi Hutchinson, D-Chicago Heights, filed an amendment to Senate Bill 9 on March 2 that would expand Illinois’ statewide 6.25 percent sales tax to:
- Storage of essentially anything that’s tangible personal property (not digital) except “grain.” This includes self-storage units.
- Services that repair, alter, fit, clean, paint, coat, tow, inspect or maintain tangible personal property. This does not apply to major home improvements, though.
- Landscaping services
- Laundry and dry-cleaning
- Cable TV, satellite TV or any other video or audio streaming service
- Security services, private detectives
- Pest control
- Tattooing, body piercing, tanning, massages
- Personal care services including manicures and pedicures
- Hair removal will be taxed but the “cutting, coloring, or styling of an individual’s hair” will not be taxed.
There are some carve-outs for personal care services that will not be taxed, however. These include: services provided by or on the order of a licensed physician, licensed chiropractor, physician assistant, advanced practice nurse, registered nurse or licensed practical nurse.
The anchor of the Senate’s so-called “grand bargain” has always been tax hikes. The plan that failed March 1 included $7 billion in tax hikes, including personal and corporate income tax increases, as well as an expansion of the sales tax to include services, food and drugs.
The plan also included an annual $200 million contribution to Chicago Public Schools teacher pensions, $7 billion in borrowing (to pay down Illinois’ nearly $12 billion in unpaid bills) and the approval of six new casinos across the state, including one in Chicago.
What the plan does not include is meaningful spending reform, or a plan to tackle the state’s $130 billion pension crisis.
Taxpayers don’t want tax hikes: In fact, a recent poll showed 66 percent of Illinoisans do not support tax hikes.
A budget plan that would truly save Illinois has to address the key spending drivers that are crushing Illinois residents. That means comprehensive property tax reform, which would provide homeowners relief from the highest property taxes in the nation. It also means accepting that pension liabilities will only continue growing at a rapid pace – and ending the crisis for good by moving new workers to 401(k)-style plans, while protecting benefits workers have earned already.
The Illinois Policy Institute has laid out a plan that provides clear steps forward for politicians to pass a balanced budget.
Tax hikes won’t work. With the failure of the grand bargain, Springfield has an opportunity to hit reset on budget talks and pursue solutions that will address Illinois’ crises long term.