2020 has arrived, and with the new year comes a few updates that you might’ve missed during the holiday slumber. No, we’re not talking about marijuana legalization in Illinois, a source of taxation and of course, a lot of discussion. We doubt you missed that bit of news. The change we’re talking about is a slight increase on your receipt if you’re out on the town, eating and drinking at bars and restaurants.
Regardless of your stance on the increase, you live here and you’re going to have to deal with it if you’re planning on visiting any restaurants or bars any time soon. So, let’s get that much out of the way.
The increased food and beverage tax (FBT) has gone into effect in Champaign, and beginning March 1st, the tax will increase in Urbana as well. For the first time in two decades, Champaign’s FBT increases, jumping 2.0% from 0.5% to 2.5% as approved in July 2019 by the City Council. Urbana’s FBT will increase from 1.5% to 2.0%, approved in December by Urbana City Council. For reference on what it is like in other communities in Illinois that seem comparable, Bloomington’s FBT is 2.0%, and Peoria’s is 2.8%.
In Champaign, the increase is “estimated to generate $6,200,000 in recurring revenues annually” which will go to fund essential services like fire and police department needs, community engagement through youth programs, and any number of other things deemed as a priority by the city (and ultimately you by putting a bug in your council person’s ear). That’s a good chunk of dough that can go to make this place a little bit better. Champaign and Urbana alike are always trying to find ways to make their budgets more solvent.
This being the first time this particular tax has increased since 1998 is a bit of a head scratcher, considering Champaign has grown by 7% since the last recession. Inflation must be accounted for in order to keep up with the needs of its citizens. As a community, we look to these funding mechanisms in order to make improvements where and when they are needed. It takes planning, and the City of Champaign has laid out a few things that would be the focus of where to allocate these “new” funds. Thankfully, the strategies for re-allocation can be revisited in the future. Priorities and initiatives change, so maintaining the flexibility while having a vision to begin seems like a good thing.
This might appear as a penalty to the food and drink industry, which as most know, is constantly battling a tenuous-at-best landscape to survive within slim margins (for most). However, without speaking too much for bar and restaurant owners, it could be seen as penalizing their customers by increasing their bill a bit. Depending on how you look at it, this isn’t coming out of the pockets of the restaurants and bars. The money is coming out of the pocket of the consumer, and when it comes down to it, the money spent at bars and restaurants by individuals is discretionary income. While most can dine out every so often, there are plenty of people that simply cannot afford to eat at restaurants.
In the simplest terms: Dining out is a luxury. Taxing luxuries makes sense. When we’re analyzing the tax increase, it should be recognized that even though the cost is going to increase a bit, the money being spent is already money that was probably going to be spent anyway since we’re past the question of whether or not you can afford to dine out. Restaurants have had a handful of months to prepare for it, and if you’re upset about the increase, you shouldn’t get upset at the barista selling you a cup of coffee.
For those who eat and drink at restaurants and bars, it’s going to cost a little bit more, but we have a bustling food and drink community that is supported by all of us that eat and drink here. We’re already contributing to the existence of these places, which makes us a somewhat healthier community than most for that reason. We’re probably not going to stop eating and drinking at restaurants because of an increased FBT. Some might throw a small fit, and make the argument that they aren’t going to be able to spend as much as they typically would on a night out, but we’d argue that simply isn’t true and moreso a showcase that there’s more depth and nuance to the rationale for an increase.
As Champaign-Urbana continues to grow — in a state that definitely isn’t growing at-large — the community could use the money in order to make this a better place to live. As people that have a bit of extra dough to afford the cost of a meal outside of your own kitchen, this is a practical increase that capitalizes on the support of the food and beverage industry that’s been built here. This is a tax to visitors of our community as well. Think of the influx of dollars when it comes to big events that drive tourism, say for example, the Illinois Marathon. We’re already generating hotel taxes because of these visitors. We can generate additional funding through the FBT to those who chose to visit Champaign-Urbana and enjoy what we’ve all helped build through our tax dollars and community support in conjunction with the business owners that create and operate the establishments.
We should be thanking the City of Champaign and City of Urbana for implementing these changes in order to help improve all of our lives through this affordable taxation. Without finding practical and justifiable ways to increase revenue in our cities through our taxing body, we can’t afford to keep people in essential positions. We have to find avenues for income, and increasing FBT makes a lot of sense — ultimately, if you weren’t following the news, you probably wouldn't even notice that it was happening. That’s the key.