CHICAGO (CBS) — Mayor Rahm Emanuel revealed Wednesday that he plans to move forward with a controversial tax plan from his campaign for mayor – cutting the city’s sales tax, but applying it to several services that now go untaxed.
The announcement comes two weeks before he is required to present his plan for a balanced budget for 2012 by cutting more than $600 million in red ink.
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The mayor surprised even his own people by dropping that tidbit on Wednesday after repeating his stance that he wouldn’t consider higher taxes or tolls on Lake Shore Drive – ideas suggested by Inspector General Joe Ferguson on Tuesday.
“I’m not taxing the commuters on Lake Shore Drive, I am against an income tax for the city of Chicago. I am against increasing property taxes,” Emanuel said Wednesday. “I am for lowering the sales tax and I, in fact, will have a tax cut that I committed to in the campaign in my budget.”
As CBS 2 Chief Correspondent Jay Levine reports, Emanuel did not elaborate on what services the expanded sales tax would cover and it’s likely no details on the plan will be revealed until his budget address on Oct. 12.
But the mayor did reveal that his campaign proposal to reduce but expand the sales tax – which would require legislative approval in Springfield – is anything but dead.
Dubbed the “Rahm Tax” by Emanuel’s opponent Gery Chico in the mayoral race earlier this year, the plan would lower the sales tax rate, but extend it from just retail goods to many services as well.
Chico campaign ads claimed Emanuel’s tax plan amounted to “the largest sales tax in the city’s history.”
Emanuel has countered that reducing the sales tax rate but extending it to what he called “luxury” services would cut taxes for most Chicago residents.
“It has to be a net tax cut for working families,” Emanuel said in February. But he has been short on specifics regarding what would be taxed and what would be exempt.
Tom Johnson, president of the Taxpayers’ Federation of Illinois, said in February that “You have to identify service by service and say whether you’re gonna include landscaping services,” or other services like charter jets, limousines or country club memberships. But Johnson also said taxing those types of services “won’t buy down the rate by 20%.”
Since the campaign, Emanuel hasn’t mentioned his sales tax plan until Ferguson supported it on Tuesday. But on Wednesday, the mayor revealed it was anything but dead, and that he’s continuing to push for enabling legislation in Springfield.
“I’ve talked to both the (House) Speaker and the Senate President about lowering the sales tax by expanding what is, in fact, taxed,” Emanuel said. “I wanted to do exactly what I think is the right thing – close loopholes, lower the rate, make sure other people are carrying the burden – not the working families of the city of Chicago.”
A spokesman for Senate President John Cullerton confirmed Cullerton did speak with the mayor and supports the concept of reducing but expanding the sales tax. In fact, a similar bill actually passed the Senate two years ago, but was never called in the House.