When Evanston residents used the annual Evanston Township meeting on Tuesday to recommend a referendum on the head tax proposal, they took a new approach to tackling this controversial issue.
A vote on the $5 per month head tax on all Evanston businesses with more than 10 employees could appear on November’s ballot if approved by the township’s board of trustees, which is composed of the city’s aldermen.
“(A referendum) will test the will of the voters,” said Mimi Peterson, co-chairwoman of the Fair Share Action Committee, a resident group that supports the motion.
The proposed head tax has already been rejected twice by the Evanston City Council, most recently in an 8-1 vote in February.
“This issue has been dealt with before,” said Jonathan Perman, executive director of the Evanston Chamber of Commerce and an opponent of the head tax. “Why would people take three hours of city and staff’s time to discuss something that isn’t going to happen?”
The approval of a head tax would increase the tax burden placed on local businesses and discourage new firms from setting up operations in Evanston, Perman said.
“During a recession, when many businesses are still trying to overcome the effects of Sept. 11, it is just wrong to add a tax burden to businesses,” he said. “Businesses have a choice as to where they locate, and they will look at the increased tax burden and move on.”
Businesses already pay about half of the city’s property taxes without using many of its services, Perman said.
But Peterson said enacting a head tax would serve to generate extra revenue without further increasing the tax burden on homeowners. The need for extra revenue is illustrated by the city’s nearly $4 million budget deficit, which prompted City Council to increase property taxes by 7.2 percent in February. The hike puts pressure on homeowners, Peterson said.
The Fair Share Action Committee supports the head tax proposal, but did not formally initiate the nearly three-hour discussion, she said.
“There was no formal action, but that’s not to say that many members (of the committee) weren’t involved,” Peterson said.
Businesses of all sizes would feel negative effects if the head tax is eventually adopted, Perman said.
“I can think of no worse public policy for local business,” he said.
Small businesses would suffer from larger businesses being driven away by the higher tax burden, while large employers, such as the local hospitals and Northwestern, would face drastically higher tax bills, he said.
Even though Peterson’s organization is one of the main action committees pushing for NU to make a greater fiscal contribution to the city budget, she explained that the head tax proposal is not aimed at any specific institution.
NU officials decline to speculate on the possible tax increases resulting from a head tax.
