Home repair tax could drive nail into Illinois economy's coffin, expert warns
Rather than trying to build back the crumbling Illinois economy, a proposed tax would add a new disincentive for anyone considering moving to the state and make it more likely that those already here would get out as soon as possible, the Illinois Policy Institute argued on its website recently.
The amendment to Senate Bill 9, itself a part of a the "grand bargain" budget still around in the General Assembly, would expand the state’s 6.25 percent sales taxes to cover home repairs.
Writing for the institute, Brendan Bakala said Bill Ward, vice president of the Home Builders Association of Illinois, argued that taxing home repairs would have the largest impact on residents dealing with fire or storm damage.
"On $20,000 damage to a home, the tax will amount to $1,250 in home repair work," Ward told the State Journal-Register.
Bakala worries that the tax would mainly hurt senior citizens and others with limited means.
“Hutchinson’s proposed tax on home repairs would be yet another cost for Illinois’ middle class,” Bakala wrote. “Illinois homeowners already pay some of the highest property taxes in the country and carry one of the most expensive overall tax burdens in the nation. The last thing homeowners need is a new tax on a basic service.”
Bakala also argued that the amendment would make it more difficult for home repair businesses to operate.
“Industry experts have voiced concern over the proposal, citing it as convoluted, hard to enforce and overly expensive,” he wrote. “The Home Builders Association of Illinois opposes Hutchinson’s proposed tax and claims that it would cost 521 jobs, $47 million in reduced home repair and maintenance work, and a nearly $8 million reduction in revenue for state and local coffers.”
Ward noted in comments to the Illinois News Network that the tax would lead to increased payments for homeowners, either in their bills or in insurance premium hikes.
Experts have also expressed concerns that the tax would force some businesses into doing work off the books, increasing the risk for fraud.
“Though currently shelved in the Senate Assignments Committee, SB 9’s amendments, with its slew of new taxes and tax hikes, is by no means off the table,” Bakala wrote. “Many in Springfield would like to see the tax-laden proposal become law, eager for fresh revenue to feed the state’s cost drivers. SB 9 and all its tax hikes should be thrown out for good, and lawmakers should embrace taxpayer-friendly reforms that will actually encourage people to live, work and retire in Illinois.”