Summary of Proposed Revenue Ordinance

2015 Budget Recommendation, City of Chicago

MCC

Current Rate

Proposed Rate

Projected New
Revenue

Require Website Facilitators to Collect Hotel Tax

3-24-020
4.5%
4.5%
$1,000,000
Short-term vacation rentals are currently subject to the City's hotel tax, but website facilitators, such as Airbnb, have not been required to collect the tax, making
enforcement difficult. The proposed amendment would require facilitators to collect the hotel tax on transactions that occur through their websites.
Close Sales-Use Tax Loophole
3-27-030
credited
1%
$17,000,000
Purchases made outside of the City of Chicago for use in Chicago are subject to the City's use tax of 1 percent, but if a purchaser can show that they paid sales tax in the
jurisdiction where they purchased the goods, they receive a credit against the use tax owed to the City. However, some companies purchase goods in other
municipalities, receive use tax credits from the City for sales taxes paid to those municipalities, and then receive sales tax rebates from the municipalities where they
made the purchases. The proposed change would close this loophole by eliminating City use tax credits for any amounts that have been rebated by the other
municipality.
Personal Property Lease Tax Increase
3-32-030
8%
9%
$15,000,000
The personal property lease tax is collected on the lease of personal property such as software and equipment. This tax was last increased from 6 to 8 percent in 2008,
and the current proposal would increase the tax rate by 1 percent to 9 percent effective January 1, 2015.
Eliminate Lease Tax Exemption for Car Sharing
3-32-020
0%
9%
$1,000,000
In 2006, an ordinance was passed to exempt car sharing companies from the personal property lease tax. This exemption was provided to help this new industry,
including a number of non-profit car sharing groups, grow. Since that time, car sharing has become an established business model, and the smaller companies that were
in the market at the time the exemption was provided have been acquired by larger companies - ZipCar is now part of Avis, IGO is now part of Enterprise, and Hertz has
expanded into the car share industry.
Eliminate Loopholes and Exemptions from the Amusement Tax
Tax Full Price of Luxury/Special Seating Packages
4-156-020F
9% on 60% of price
9% on 100% of price
$4,400,000
Currently, the amusement tax is imposed on only 60 percent of the charge for special seating areas such as skyboxes. The proposed amendment would eliminate the 40
percent exemption and impose the amusement tax on the full charge for such packages. A credit will be provided to the payer in the amount of any other City taxes
actually paid on the same charges.
Eliminate Cable Exemption
4-156-020J
6%
9%
$12,000,000
Prior to 2014, cable companies received a 5 percent exemption, paying amusement tax at a rate of 4 percent, as opposed to the 9 percent rate applied to other similar
amusements. The exemption was reduced to 3 percent in 2014, resulting in a 6 percent amusement tax rate for cable companies. The 2015 budget proposes eliminating
this exemption, requiring cable companies pay the 9 percent amusement tax applied to other amusements. If cable companies pass this increased cost on to subscribers,
it would result in an estimated increase of $2.40 per $80 monthly cable bill.
Garage Tax Increase
4-236-020
20%/18%
22%/20%
$10,000,000
The garage tax was last increased in 2012 and then switched from a 12-tier bracketed structure to a simpler percentage-based structure in July 2013. This proposal
would increase the weekday rate from 20 percent to 22 percent and the weekend rate from 18 percent to 20 percent; weekly and monthly rates would increase from 20
percent to 22 percent. The $10 million in new revenue will be dedicated to pothole and street repair.
Consistently Apply Garage Tax to Valets
4-236-025
20%/18% on lesser amount
20% on full amount
$2,000,000
Currently, valets often receive discounted rates at the garages, they pay tax on an amount less than the amount they charge to the customer. Moreover, if the valet
parks the car on the public way, they are not required to pay the tax. This proposal will simplify the ordinance and impose the garage tax rate of 20 percent on the full
amount charged by valets.