Illinois’ new parking tax takes effect Jan. 1; critics say it will cost jobs

SPRINGFIELD (The Center Square) — To help generate $45 billion in new revenue for the Rebuild Illinois infrastructure plan, the state will start taxing parking businesses on Jan. 1.

The tax will be 6 percent of the parking rate for hourly, daily or weekly parking. The tax rate will be 9 percent on monthly or yearly parking spaces. The new monthly revenue will then be used to pay for general expenses with the infrastructure plan. Because the tax doesn’t qualify as a transportation tax, it doesn’t have the restrictions of the constitutional “Lockbox Amendment” and can be spent on dozens of member-initiated projects.

“Those who operate parking lots or garages will need to make sure they are properly registered with the state by January 1st,” Illinois Department of Revenue Acting Director David Harris said. “Revenue from this new program will go to rebuilding our state’s infrastructure and building a stronger economy. It is this department’s duty to help achieve compliance, so all taxpayers are treated fairly and consistently.”

The measure is not likely to affect many drivers in Illinois, but it drew criticism from the parking lot operators’ union in Chicago, as it would be heaped on top of the city’s rates.

“The math is simple: When workers find it too expensive to commute to the city, businesses move out. When individuals find parking prohibitively expensive, they do their shopping elsewhere. Less employers plus fewer customers means less tax revenue and fewer jobs,” said John Coli, Jr., secretary-treasurer of Teamsters Local 727. “The impact of a new state parking tax will stifle economic development in Chicago and impact all of Illinois. It will hurt workers and it will hurt businesses. We must find a better way.”

The Teamsters union said the combined tax rate for Chicago-based parking lots will see a cumulative 32 percent to 40 percent tax, higher than any other major city.

The tax will also apply to valet services, whether they charge or offer the service to customers for free.

Some consider a consumption-based tax such as the new parking tax as the most equitable type of taxation.

“Such taxes are an appropriate source of revenue for local governments and public entities such as port districts and business improvement associations; they impose costs on property owners and motorists in specific areas and so can be considered a fair way to finance local transport services,” Todd Litman wrote in a 2006 paper for the Victoria Transport Policy Institute.

The parking tax has a number of exemptions, including for municipalities that own and operate their own parking lots. Municipal parking by Metra stations, for instance, are exempt. Renters who receive a parking spot with their lease, others who rent out less than three spaces, also are exempt.

Reporting by Cole Lauterbach

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