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updated: 7/11/2018 9:46 AM

Your suburb's take from new online sales tax? $1.76 a person

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  • A U.S. Supreme Court ruling that online purchases are subject to tax will bring $140 million to Illinois. Your suburb's share? Just $1.76 per person on average.

      A U.S. Supreme Court ruling that online purchases are subject to tax will bring $140 million to Illinois. Your suburb's share? Just $1.76 per person on average.
    Jeff Knox | Staff Photographer

 
 

A recent U.S. Supreme Court ruling that all online purchases are subject to sales tax brought an anticipated $140 million windfall for Illinois this year.

But the share for individual suburbs doesn't come to much.

"Wow," Carol Stream Village President Frank Saverino said of the additional $69,809 his town could get this year. "I think anybody with common sense would look at shopping centers and see we need to figure out something to get more money back into communities."

The Supreme Court ruling means all internet purchases shipped to Illinois will now be subject to the state's 6.25 percent "use" tax, a sales tax on goods purchased outside Illinois for use in the state.

Even though Illinois shares use tax revenue with local governments, the state keeps most for itself -- 80 percent. That's $112 million for the state alone.

Then after Chicago, a state capital improvement fund, the Regional Transportation Authority and a downstate transit agency combine to take nearly 36.2 percent of the remaining $28 million, towns and counties split what's left based on population.

For the suburbs, the local share breaks down to $1.76 per resident in new funds this year.

On average, the additional revenue amounts to less than $13,000 for each of the 1,297 towns and 102 counties that will receive a share, according to a Daily Herald analysis of Illinois Department of Revenue projections. Counties receive funds based on the population of unincorporated areas.

Chicago gets a flat 20 percent of the local share, or an expected $5.6 million. That's $2.08 per person.

Because of their size, most suburbs and the collar counties will fare better than average.

In the suburbs, Aurora is expected to receive the most additional revenue, with an anticipated $347,894 influx from taxes on online sales this year. Naperville, Elgin, Arlington Heights, Schaumburg, Palatine, Des Plaines, Mount Prospect and Wheaton are expected to receive six-figure increases as well.

That's small comfort to many municipal leaders who lament the shift from in-town store purchases to online sales because many suburbs lose out on home rule or business district sales taxes.


View graphicTHERE'S MORE TO THIS STORY: Click here to see how much your town will receive from anticipated sales tax revenue from online purchases.

"Whatever we get is still going to be less than if people shopped at our stores in town," said Tom Kuehne, Arlington Heights' finance director. "It's better than nothing, of course, but with internet sales continuing to increase, that means our sales tax will shrink even more."

Illinois Municipal League Executive Director Brad Cole said his organization is pursuing legislation that would apply local sales taxes to online purchases shipped to these towns.

Saverino said he'd support that effort.

"People will go to our stores here in town, see something they like and then go home and order it online because they know they don't have to pay as much in taxes," he said. "How's that fair?"

While the Supreme Court ruling applies to all online retailers, only some will be affected, state officials said. That's because many large online retailers, like Amazon, have been charging and remitting the use tax for years.

The state will begin collecting the additional revenue in October. Only nine months' worth of additional revenue will be collected in this fiscal year.

In future years, IDOR officials and legislative financial forecasts estimate online purchases will regularly add more than $200 million annually to the state's coffers. State finance officials said the additional revenue is not earmarked for any specific purpose. For now, it will go into the state's general fund to cover costs of day-to-day operations.

Got a tip?

Contact Jake at jgriffin@dailyherald.com or (847) 427-4602.

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