Gov. Blagojevich's Ill-Conceived Gross Receipts Tax Proposal Gets Worse

April 9, 2007

CHICAGO - “ In an effort to boost weak support among legislators for his gross receipts tax (GRT) proposal, Gov. Blagojevich increased his proposed tax rates to raise an additional $1 billion for property tax relief.

This brings the total projected business tax increase to a whopping $7.6 billion a year. It also indicates a troubling signal that the governor is perfectly willing to raise this hidden tax - “ if his proposal is enacted - “ every time he thinks he needs new funding for new or expanded government programs.

This - œeasy-  increase in the GRT rates flies in the face of one of his basic rationales for imposing a GRT: the broad-base business tax would keep rates low. Even before this latest increase, his proposed rates were higher than the rates in most of the very few states that have gross receipts taxes.

The new changes were introduced on March 30 by Sen. President Jones in amendment No. 001 to S.B. 1. Among other things, the legislation:

  • Increases the proposed GRT rate on service providers from 1.8 percent to 1.98 percent
  • Increases the proposed GRT on sales of tangible personal property from 0.5 percent to 0.85 percent
  • Broadens the exemption on revenue from businesses with $1 million in annual sales in Illinois to $2 million in annual sales in Illinois (though the exemption remains too low to impact many businesses)

    While support for the GRT reportedly remains weak, the Senate president has endorsed it and will be advocating its passage. House Speaker Madigan remains silent on the proposal.

    Given its likely negative impact on private equity firms and investments in the state, the IVCA has informed Blagojevich that we oppose the tax. Take action!

  • Click here for a draft letter opposing an Illinois GRT.
  • Click here to identify and contact your state representative and senator.