A quick look at Pritzker’s new revenue streams
Thursday, Feb 21, 2019 - Posted by Rich Miller
* I really think that proposed cannabis license fee is too high…
The governor’s plan includes an estimated $1.1 billion in new revenue, with the Pritzker administration banking on selling 20 sports betting licenses at $10 million a piece [$200 million], and selling “thousands” of marijuana business licenses for a one-time fee of $100,000 [$170 million].
Other tax bumps would include raising taxes on a pack of cigarettes from $1.98 to $2.30 [$55 million] and taxing e-cigarettes at a 36.5 percent rate, the same as all other tobacco products [$10 million]. The administration is also pushing for a 5 percent statewide bag tax [$20 million]. […]
[Revenues also include] a tax on [Managed Care Organizations] to generate $390 million in revenue to help cover the costs of the Medicaid system. Pritzker’s revenue package also includes $175 million from a proposed delinquent tax payment incentive program.
* Greg Hinz…
A couple of things will catch the eye of business groups: a $75 million annual cap on how much retailers are paid to collect the sales tax—that expenditure has run over $100 million in some years—and $94 million in revenue that will come from closing what budget aides call a “loophole” by decoupling from the federal tax credit for repatriated international earnings.
* I’ve been calling for a graduated tax on the video gaming industry for a while now, so I’m glad to see it included in the budget proposal…
Pritzker would generate an additional $89 million from a higher tax structure on successful video gaming terminals
- 47th Ward - Thursday, Feb 21, 19 @ 9:45 am:
If it’s a one-time fee, wouldn’t they net more revenue if they auctioned the licenses?
- wordslinger - Thursday, Feb 21, 19 @ 9:48 am:
I’m not sure the cannabis license fee is too high, but if “thousands” are going to be issued in the next fiscal year, I’d say legislation needs to be passed and regulations promulgated toot-sweet.
- Perrid - Thursday, Feb 21, 19 @ 9:49 am:
There are thousands of businesses who can and want to pay $100,000 to grow/sell pot? That seems like a pretty big hurdle.
- Grandson of Man - Thursday, Feb 21, 19 @ 9:52 am:
A hunnert grand a pop for marijuana business licenses seems outrageous. Legalization should benefit small businesses and entrepreneurs, at the very least on the retail side. We need to help the communities who are hardest hit by the abysmal failure of marijuana prohibition, to have a healthy share of the profits and prosperity.
We really need that graduated income tax, but it’s going to be very difficult to get. It’s definitely worth fighting for. If it gets past the House (big hurdle #1), it will be fun to campaign and push for it.
- DuPage Saint - Thursday, Feb 21, 19 @ 9:56 am:
I don’t think anything should be a one time fee. Make it lower and annual
- Illinois Resident - Thursday, Feb 21, 19 @ 9:57 am:
Maybe charge $100,000 for entities with plenty of money and waive the fee (or drastically reduce the fee) for others with less means to give more residents an opportunity to be part of the industry.
- City Zen - Thursday, Feb 21, 19 @ 9:58 am:
“5 percent statewide bag tax”
Shouldn’t that read a 5 cent tax per bag?
- Not It - Thursday, Feb 21, 19 @ 9:58 am:
Can we take a quick look at JB’s budget cuts?
Oh wait….
- Steve - Thursday, Feb 21, 19 @ 9:59 am:
There’s no guarantee that raising the cigarette tax will bring in more money.
- JS Mill - Thursday, Feb 21, 19 @ 10:01 am:
=A hunnert grand a pop for marijuana business licenses seems outrageous.=
@GOM- with respect
I think that number is a much lower number than was required of Med Mar licenses IIRC. That said I am in total agreement with you in that I want the bulk of access to go to small businesses. I would rather it be dominated by smaller operations than big corporations. Still, the small operators need to have resources to be able to, among other things, follow regulations, provide an appropriate location and security, and maintain and handle cash flow. That is going to eliminate a lot of really small head shop type operators and I think that is ok. To a degree.
- Anonymous - Thursday, Feb 21, 19 @ 10:06 am:
Marijuana needs to have annual licensing. Just what the heck is the point of a one-time fee?
- Amalia - Thursday, Feb 21, 19 @ 10:10 am:
hurry up and legislate the money flow or how to pay for services? and how will marijuana businesses be fairly distributed in communities with a $100K fee for biz? seems there could be differences in fee with size of business. Bag tax will have to take in consideration that smart folks bring bags not take. e/tobacco equality is right on.
- shevek - Thursday, Feb 21, 19 @ 10:10 am:
Currently a medical cannabis dispensary costs $30,000 for the initial license and $25,000 every year to renew. A grower license is $200,000 and $100,000 to renew every year. Apparently, there are plenty out there willing to pay those kinds of fees. But thousands?? I think that’s a stretch. I guess we’ll see.
- pawn - Thursday, Feb 21, 19 @ 10:13 am:
@Not it, flat budgets are like cuts, because they do not account for the financial realities of external costs. The buying power of those dollars erodes over time.
- Pick a Name - Thursday, Feb 21, 19 @ 10:30 am:
That progressive tax to hit the rich will also hit the middle class, you can bet on it.
More money taken from people slows the economy, slows job growth, creates higher unemployment etc. It’s a pretty simple concept that seems to get lost on many.
- Louis G. Atsaves - Thursday, Feb 21, 19 @ 10:31 am:
I don’t see where there will be a cap on the number of licenses. Assuming they sell “thousands” of licenses by the end of this year, one can also assume that the number of future licenses will taper off based on market conditions. That may affect future budgets.
Mom and Pop operations don’t appear to have much of a chance to get into and stay in this business.
- Oswego Willy - Thursday, Feb 21, 19 @ 10:33 am:
===More money taken from people slows the economy, slows job growth, creates higher unemployment===
Then you must be for raising the minimum wage. You know… More money for people speeds up the economy, allows job retention and families more disposable income or in many cases a chance to get off social programs…
- Unpopular - Thursday, Feb 21, 19 @ 10:35 am:
The Cartels should be able to afford the $100,000.
- don the legend - Thursday, Feb 21, 19 @ 10:36 am:
Our problems are beyond huge. Petal to the metal. Revenue from everywhere is needed.
- Not It - Thursday, Feb 21, 19 @ 10:41 am:
Pawn: you sound like a true taxEATER. I’m a taxPAYER and I want to hear what programs we can roll back or eliminate before JB reaches for my wallet. He didn’t even try to cut spending. Didn’t even try.
- Streator Curmudgeon - Thursday, Feb 21, 19 @ 10:44 am:
What is a “5 percent bag tax”?
Five percent of what? The value of items in the bag? Tax on the bag itself?
- Johnnie F. - Thursday, Feb 21, 19 @ 10:45 am:
So there’s no predicted revenue FY20 from the actual sale of recreational cannabis, just business licenses?
- Oswego Willy - Thursday, Feb 21, 19 @ 10:45 am:
===you sound like a true taxEATER. I’m a taxPAYER===
We’re all taxpayers.
If you’re from anywhere outside Chicago, you’re getting more than your share of state taxes.
I bet it felt great to type, the anger, the “us versus them”….
- Anonymous - Thursday, Feb 21, 19 @ 10:45 am:
Not it - go ahead and identify where you would cut and by how much.
- Pick a Name - Thursday, Feb 21, 19 @ 10:47 am:
Willy, I’m ok with reasonable increases in the minimum wage. What is proposed and approved is not reasonable. It will damage many small businesses, the states biggest employer.
It’s the way of the world today. Will employees be a lot more productive at $15/hour than $10-$12. I don’t think so because many feel they are entitled, just as many young people want free college. Average to below average workers will find it difficult to find jobs and keep jobs.
- Oswego Willy - Thursday, Feb 21, 19 @ 10:53 am:
===What is proposed and approved is not reasonable. ===
It’s $15 an hour… in 2025.
Yikes.
If a business can’t plan for that given thus ramp…
===Will employees be a lot more productive at $15/hour than $10-$12. I don’t think so because many feel they are entitled, just as many young people want free college.===
Opinion. Not a fact. Lumping the work ethic of an entire wage group is ironically elitist
===Average to below average workers will find it difficult to find jobs and keep jobs.===
You base this on… what? Statistics, not anecdotal.
- Al - Thursday, Feb 21, 19 @ 10:58 am:
I do not know about the cigarette tax. I favor raising the sales age for tobacco to 21 but our tobacco taxes already seem pretty stiff. Doubling the Liquor tax might be better public policy.
- lake county democrat - Thursday, Feb 21, 19 @ 11:04 am:
This seems like a reasonable analysis to me: https://www.mercatus.org/bridge/commentary/why-illinois-ranked-least-fiscally-healthy-state
We need structural change: both a progressive income tax and pension reform on future benefits. All these relatively small income streams are well and good, but that’s the ballgame, and politically I doubt there’s the will to do both, or even one.
As for raising the minimum wage, we’ll see what it accomplishes. Seattle’s experience has been ambiguous.
- Anonymous - Thursday, Feb 21, 19 @ 11:08 am:
An across the board spending cut of 5% should be easy and doable.
- Rich Miller - Thursday, Feb 21, 19 @ 11:20 am:
===should be easy and doable===
lol
Then let’s see your numbers.
- Last Bull Moose - Thursday, Feb 21, 19 @ 11:20 am:
The approach to marijuana bothers me. Are they setting this up as a one time deal? Are they counting on sales taxes to provide a continuing revenue flow?
For me, the main goal is not revenue but disrupting the cartel distribution and marketing networks. I would be happy with zero revenue if we could do that.
Good monopolists wipe out their competition, then collect monopoly profits.
- Pick a Name - Thursday, Feb 21, 19 @ 11:21 am:
Willy, I base this off decades of business experience, having gone thru many up periods and many recessions. I base it off having a business degree from your beloved UIUC. Experience and being in the trenches is the best teacher.
I base it off knowing the dire situation of the state of Illinois, the high sales taxes, the incredibly high property taxes, the pension situation(one of the rating agencies disputes the figure is $133 billion, they venture it is $100 billion more.)
It isn’t just one aspect(higher minimum wage) it is many things.
- Oswego Willy - Thursday, Feb 21, 19 @ 11:23 am:
===I base this off decades of business experience, having gone thru many up periods and many recessions. I base it off having a business degree from your beloved UIUC. Experience and being in the trenches is the best teacher.===
Narrator: he has no facts.
So you want the wage to stay lower so more money can be spent on social service avenues the working poor use?
Hmm.
That’s not a great argument either, lol
- Duke of Normandy - Thursday, Feb 21, 19 @ 11:48 am:
Not that I’m against a tobacco/ e cigarette tax, but isn’t tobacco more primarily used by lower socioeconomic folks? Can’t we just raise the taxes on more expensive items instead of raising the minimum wage and then taking some of it back on tobacco/ e cigarettes?
- Pick a Name - Thursday, Feb 21, 19 @ 12:04 pm:
I thought I would at least get a “you know” since I went to UIUC. LOL
- RNUG - Thursday, Feb 21, 19 @ 5:48 pm:
== pension reform on future benefits. ==
You can do that now for new hires; don’t have to wait for a CA.
- Anonymous - Thursday, Feb 21, 19 @ 6:50 pm:
Defined benefit systems don’t work unless the benefit is meager. Virtually no private company has them anymore. I wonder why?
- RNUG - Thursday, Feb 21, 19 @ 7:31 pm:
== Virtually no private company has them anymore. ==
Irrelevant and immaterial. Corts have said it has to be paid.