This past week we travelled to Washington D.C. to talk with our elected officials from both parties about how immigration policy, tax reform, and financial regulations affect our local businesses.
After speaking with Senators, Representatives, and their staffs I am always filled with a sense of optimism that we can make positive progress toward a more pro-business climate. This trip, the feedback was a little more direct however.
At the same time we met with local Representatives, President Trump was negotiating with Congressional leaders on a plan to provide permanent status to DACA recipients. These workers pay taxes and contribute to their local economies and removing them would be a significant self-inflicted wound to an economy that still has sluggish growth.
This is a rapidly developing situation, and we are far from the completed deal. However, I am encouraged that the President is willing to negotiate here. We will continue to monitor the situation and inform Membership of any changes.
Representative Foster will host a panel discussion on DACA on Saturday for individuals that wish to learn more. This is a good opportunity to share your thoughts on how DACA protection supports all of our prosperity. More information can be found here.
Home Rule Sales Tax
We also spent a lot of time in D.C. speaking with our elected officials about the potential for federal tax reform. We have an opportunity to lower rates for businesses of all sizes and reduce the byzantine complexity of the tax code to provide clarity for everyday tax payers.
But at the local level, we are also in the process of reviewing and responding to the proposal from the Financial Advisory Board and city staff to double the current Home Rule Sales Tax.
As you might recall the Home Rule Sales Tax was set to expire this year, but the City Council will consider the FAB proposal to double it on Tuesday, September 19 at the next City Council Meeting.
The NACC opposed the implementation of the HRST when it was proposed in 2015. We cited that once implemented it wouldn’t be easy to remove and that it made Naperville businesses less competitive.
I spoke at the City Council meeting on August 29 to highlight the negative impact the tax would have on business competitiveness. If City Council increased the HRST, Naperville would have a rate that is a full 1% above neighboring Lisle.
The Naperville rate would be greater than many other surrounding communities as well. Bloomingdale, Burr Ridge, Carol Stream, Clarendon Hills, Lisle, Oak Brook, Roselle, West Chicago, Westmont, Winfield, and Woodridge would all have lower rates. That is a lot of localities for a consumer to shop with less taken out of their pocket.
On Line Sales and the MFA
In addition, the unfair disparity between online sellers would grow if the city increased the HRST. Local businesses should compete with internet sellers, but they should be able to do so on a level playing field.
Currently, if an out of state seller is required to pay tax in Illinois the rate is only 6.25%, and many online sellers are not required to collect any sales tax at all! Meanwhile, local sellers would be required to collect 8%.
That means if you bought a $2,500 refrigerator online you could pay $200 or $43.75 less in taxes than if you purchased it in Naperville. Note, you would never pay more in taxes. That’s true even if the Naperville store has the exact same item for the exact same price.
And while the Marketplace Fairness Act seeks to level that playing field, it is not the law of the land and has been argued back and forth for years. We cannot pass this increase and assume that Congress will save our competitiveness later.
What You Can Do
The Naperville Area Chamber of Commerce will discuss this issue at our next Legislative Forum on September 18. We encourage all Members to attend. Whether you own a business or simply buy goods in Naperville you would be affected by the proposed increase.
Registrations are available online here.
In addition, we are conducting a fact finding survey. One reason the City Council gave for the HRST over other potential taxes is that many of the goods are purchased by out of town residents visiting Naperville.
The City estimated that figure at approximately 50/50, however that is a best estimate based on national data. We are asking local sellers to review their sales data and see how many of their sales come from Naperville residents.
Please help us provide that important feedback to City Council and respond to our survey here.