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Cook tax hurts sales in county line towns: study

Monday, May 11, 2009
Crain's Chicago Business
by Steven R. Strahler

(Crain’s) — Retail sales declined much faster last year in Cook County communities near the county line than they did for the entire county, according to a study that seeks to measure the impact of last July’s politically charged increase in the county sales tax.

Preliminary findings were released Monday, ahead of word on whether Cook County Board President Todd Stroger will veto a measure to eliminate the one percentage point boost in January.

The survey by DePaul University’s Chaddick Institute for Metropolitan Development and Economic Research Associates Inc. found that Cook County communities near the county line last year experienced a 5.7% drop in retail sales, compared with a 4.1% drop for the county as whole.

Meanwhile, the decline was just 1.7% for communities outside of Cook County whose geographic center is within five miles of the county line.

Crain’s Chicago Business last week reported similar trends, based on sales tax receipts listed by the Illinois Department of Revenue.

Pending more detailed conclusions due in September, the DePaul study cautioned that it is too early to make “an accurate general assessment” of the tax hike’s impact on buying behavior.

“One reason is that areas with lower sales taxes were hit harder and earlier by the recent real-estate crisis and economic downtown than areas with higher sales taxes,” the report said. “Kane and Lake counties, for example, were hit much harder by the decline in housing starts than Cook in early 2008.”

The survey of 375 communities in six counties found that the gap between Cook County sales taxes and those in collar counties has widened steadily since 1995. The weighted gap last year was as much as 2.6 percentage points, the study estimated, compared with a maximum weighted gap of 1.8 percentage points in 1995.



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