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Cook County Finance Committee Backs Alcohol Tax Hike

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Updated 11/14/11 – 4:01 p.m.

CHICAGO (CBS) – A key Cook County committee has endorsed County Board President Toni Preckwinkle’s plan to raise alcohol taxes as part of next year’s budget plan.

By a vote of 12-5, the Cook County Board’s Finance Committee backed the first alcohol tax hike at the county level in more than 20 years.

As CBS 2’s Dana Kozlov reports, opponents of the liquor tax hike said it can’t help the county, because it will kill business.

Cook County Board President Toni Preckwinkle has proposed an $11 million increase in the county’s taxes on beer, wine and hard liquor to help close a $315 million budget deficit.

Bar and restaurant owners have said the tax hike will hurt an industry that was already suffering in the down economy.

Bar owners said that generally, when alcohol taxes go up, liquor wholesalers slide in price hikes of their own.

Asked how much of a price hike that would mean for the average domestic draft at a bar, Harvey bar owner Larry Stevens said, “I’ll probably go about 50 cents.”

Stevens said he has no choice. Three other liquor tax hikes levied by the state over the past decade already have hurt his business.

“We have to pass it on to the consumer and they can’t afford those prices,” Stevens said.

“We have the nation’s highest hospitality taxes and this was a loss for Chicago’s and Cook County’s small businesses – especially the locally-owned bars and restaurants,” Pat Doerr, managing director of the Hospitality Business Association of Chicago said.

Other opponents have said it could kill Chicago’s convention and tourism business, by convincing people to go elsewhere.

But those supporting the tax increase said it raises much-needed revenue and amounts to a lot of fuss over small change.

As it stands, the cost of beer will go up 3 cents a gallon. The cost of liquor will go up anywhere from 8 to 50 cents a gallon.

It comes down to pennies, if that, per drink.

“Nobody likes a tax, but I don’t think the president’s made it so burdensome that we’re going to see this impact,” said Commissioner Jeff Tobolski (D-16th).

But the tax hike didn’t pass without a fight.

“Every one of these taxes is what you call a poor man’s tax,” said Commissioner William Beavers (D-4th). In addition to the alcohol tax, the Finance Committee also approved expanding the county’s tobacco tax to snuff and chewing tobacco.

“My colleague has spoken about the poor man’s tax. We use it to pay for the poor man’s hospital. We need the tax,” Commissioner Jerry “Iceman” Butler (3rd) said, referring to the county’s hospital system, which is used largely by low-income residents who rely on Medicaid.

Some commissioners still held out hope for a compromise before a final vote on the 2012 budget plan on Friday.

“At this point, I’m not giving up on either a better tobacco formulation or, if there’s a possibility of working out some kind of an agreement on alcohol,” said Commissioner Larry Suffredin (D-13th).

Commissioner John Fritchey (D-12th), who was one of those who voted against the alcohol tax hike, had been pushing to make the tax hike temporary and eliminating it if and when the city adopts an ordinance decriminalizing small-time marijuana possession cases.

As WBBM Newsradio’s John Cody reports, Fritchey says an indirect tax on marijuana would be better than a direct tax on alcohol

LISTEN: WBBM Newsradio’s John Cody reports

Fritchey said the liquor tax hike might not be needed if the Chicago City Council approves a proposal to issue tickets for small-time pot cases, rather than making arrests.

A group of Chicago aldermen has introduced a proposed ordinance that would reduce the penalty for possession of 10 grams or less of marijuana. People caught with those amounts of pot would face a $200 fine and 10 hours of community service, instead of jail time.

“I’ve proposed a means of avoiding the tax through savings in the budget that would be realized once the city passes a marijuana decriminalization ordinance,” Fritchey said.

Fritchey’s plan would have called for temporarily raising the alcohol tax hike, then removing the tax hike a month after Chicago approves a plan to have police issue $200 tickets for minor cases of marijuana possession, instead of making arrests.

He asserted that his proposal would produce savings of $78 million and eliminate the need for a permanent alcohol tax hike in Cook County.

But the board’s Finance Committee backed Preckwinkle’s tax hike plan instead and, given that the Finance Committee is made up of the entire County Board, approval by the full board is all but certain.

The committee also signed off on a plan to charge $4.75 a day to park at the main Cook County Criminal Courts Building and the five suburban courthouses. But the plan would allow a parking fee exemption for jurors, law enforcement officials, victims called to a court hearing or trial, and those visiting a courthouse for early voting.

A final vote on the 2012 budget by the full Cook County Board is scheduled for Friday.

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