SPRINGFIELD - The owner of Budget Liquors in Normal said some customers are stocking up on alcohol, trying to beat the tax increase on beer, liquor and wine that kicks in Tuesday.
Owner Chris Cutler calls it "pantry buying." And he should know.
He's doing the same thing for his store, buying up cases of beer and bottles of liquor before the tax hikes hit.
"Certainly, we've packed the store with as much inventory as humanly possible," Cutler said.
Along with an increase in alcohol taxes, consumers will see a higher sales tax rate on products such as candy, personal hygiene items and soft drinks on Tuesday.
It's part of an effort from lawmakers and Gov. Pat Quinn to pay for construction projects like new roads, schools and bridges across the state. They've pushed the construction plan for years, hoping an influx of construction work would boost the Illinois economy.
"Otherwise, our roads are going to fall apart," said state Rep. Bob Flider, D-Mount Zion.
In exchange, candy, liquor and shampoo lovers will have to pay.
Consumers will see the sales tax increases directly. The alcohol taxes are paid by distributors, but store owners and others say that cost increase inevitably will be passed down to consumers.
Not everyone is worried, though.
Greg Kuhl, owner of Bidwell Candies in Mattoon, said he doesn't think the sales tax hike on candy will hurt his business too much.
Now, candy is taxed as food at 1 percent. Tuesday, it'll go up to the general state rate of 6.25 percent. That same standard rate will be applied to soft drinks and hygiene products as well.
Kuhl says he has enough regular customers of his candy store that they'll keep coming.
"I don't think it'll hurt us too much," he said. "They might growl about it a little bit."
Candy and soft drink consumers will find the same sales tax markup everywhere, whether it be grocery stores or vending machines.
For alcohol, retailers predict cost of the tax increases will be passed along in stores.
Distributors will pay an excise tax of about 2.6 cents more for a 6-pack of beer, 13 cents for a bottle of wine and 81 cents for a fifth - about 750 milliliters - of hard liquor, said Illinois Department of Revenue spokeswoman Sue Hofer.
Liquor stores have advertised about the Tuesday tax hikes, encouraging customers to stock up beforehand.
But it's possible that the price hike might not be seen everywhere on Tuesday.
Martha Rittmueller, owner of the Lavender Crest Winery in Colona, said she doesn't plan to pass along the cost increase to her customers immediately.
The winery makes 19 wines and produces about 10,000 gallons every year. Rittmueller said they'll re-evaluate business early next year and see if they need to raise prices to deal with the tax increase.
"Ultimately, we may not have any choice," she said.
Even though the price hikes could be relatively small, they could be an issue for consumers hit by the recession. State Rep. Bill Mitchell, R-Forsyth, noted unemployment numbers released recently show the Decatur area above 13 percent.
"There's a lot of people out of work," Mitchell said. "It all adds up."
There is one thing perhaps standing between the tax increases becoming reality, though.
A major liquor distributor who also owns the Chicago Blackhawks has filed a lawsuit trying to block the hikes from becoming law.
Hofer said she couldn't comment on the case.
But while lawmakers pushed through the alcohol and sales tax increases, they took a pass on raising cigarette taxes. The Illinois Senate signed off on raising the tax on cigarettes by a $1 a pack over two years, but the House declined.
The first increase on cigarettes would have taken effect in September.
Starting Tuesday, taxes on alcoholic drinks will go up, and the sales tax rate on candy, soda and some hygiene products will, too. Here's a look at what consumers can expect.
Alcohol
Increased taxes will be paid by distributors, and could be passed onto consumers.
Beer: 2.6 cents more per 6-pack
Wine: 13 cents more per bottle
Hard liquor: 81 cents per fifth
Sales taxes:
The state's share of sales taxes on several items will be raised from the 1
percent rate used on food and medicine to the standard 6.25 percent. Here's some of what would be affected.
-- Chocolate bars
-- Yogurt or chocolate covered fruit or nuts
-- Honey-coated nuts
-- Lollipops
-- Breath mints
-- Gum
-- Caramel popcorn
-- Body soap
-- Shampoo
-- Toothpaste
-- Mouthwash
-- Deodorant
-- Sunblock
-- Soda
-- Sport drinks
-- Sweetened tea
-- Flavored waters
Posted in Local on Saturday, August 29, 2009 4:30 pm Updated: 7:40 am.
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