Tax and Budget
Issue Brief: Expanding the Base of Illinois’ Sales Tax to Consumer Services
Release: May 20, 2015
This report identifies why expanding the base of the state sales tax to include consumer services—like pet grooming, haircuts, country club membership, health clubs, and lawn care—would simultaneously help to stabilize revenue generation for the state’s fiscal system, while reforming tax policy to comport with the modern economy.
As detailed in the report, Illinois is one of 45 states that impose a general sales tax. And while the state-only sales tax rate of 5 percent is below the national average state-only sales tax rate of 5.5 percent, Illinois’ sales tax rate is applied, in large part to the sale of goods (like clothing and furniture) and not services (like pet grooming, health clubs, lawn care, and haircuts). Illinois’ sales tax applies to few services. In fact, of the 45 states with a general sales tax, the average number of service industries taxed is 51; Illinois is an outlier, taxing only five consumer service industries. And that is why the state’s sales tax policy fails to jibe with the modern economy. Indeed, over 72 percent of the Illinois’ economy is derived from the sale of services, while just 17 percent stems from the sales of goods.
Expanding the Base of Illinois’ Sales Tax to Consumer Services Will Both Modernize State Tax Policy and Help Stabilize Revenue, estimates that $2.105 billion in additional revenue could be generated if Illinois’ sales tax base was expanded to include primarily consumer service industries, while excluding business-to-business transactions and professional services. This could go a long way toward addressing the state’s fiscal difficulties. The report also notes that by broadening the state’s sales tax base, Illinois may also be able to reduce the state’s sales tax rate if policy makers so choose.
How Revenue and Spending Impact the Illinois General Fund
Release: May 6, 2015
PowerPoint presented by Ralph Martire at the Senate Revenue Hearing.
FY2015 Illinois Budget Proposals: In Context
Release: April 8, 2014
Analysis of the FY2014 General Fund Budget
Release: October 1, 2013
The fiscal problems that have historically plagued Illinois are on full display in the FY2014 General Fund budget passedby the Illinois General Assembly. The state’s accumulated deficit remains significant, and in all likelihood will be at least $8 billion by the end of FY2014. Despite increases for some aspects of the General Fund budget, net spending on services will be $173 million less in FY2014 than in FY2013. Meanwhile, as spending on service delivery continues to decline, the annual cost of debt service continues to grow—specifically the debt owed to the state’s five public pension systems.
CTBA's Testimony and Presentation to the Pension Conference Committee
Release: July 3, 2013
CTBA's 2013 testimony and presentation to the Pension Conference Committee.