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On Monday April 1, 2019, the Village approved a Prepared Foods tax to be imposed at restaurants within the Village. The tax, which amounts to a $0.20 charge on a $10 meal, is being used to ensure that the Village is using a diversified stream of revenues to support Village operations. The Village Board is mindful that the total property tax burden shouldered by our residents is significant, despite the fact that the Village's property tax rates remain among the lowest in the state. Over the coming budget year, the Village will look at ways of equalizing the application of taxes for all residents, options for reducing reliance on individual revenue streams, as well as ways of cutting costs and increasing efficiency. Because so many of the Village's dining establishments are on major highways, a significant number of those subject to the charge are not Village residents, which helps to shift costs from our residents to those that come from other communities to enjoy our local amenities.
Many area communities impose this charge, and some impose it at rates up to 50% greater than what the Village has approved. The Village carefully studied rates in other communities, to ensure that our establishments would remain cost-competitive. In contrast to the Village's limited actions to impose the charge on prepared foods, many communities have raised their overall sales tax rate, applicable to all purchases other than certain foods and drugs. For example, the Village's overall sales tax rate is 7% (comprised of 6% state sales tax and 1% local sales tax). By comparison, Gilberts' sales tax is at 8%, Elgin is at 8.5%, Carpentersville is at 9%, Algonquin is at 7.75%, West Dundee is at 8.5-9.5%, and East Dundee is at 9-9.75%. In addition, many of those communities also impose a prepared foods tax. For taxes subject to Elgin's prepared foods tax, their general sales tax rate of 8.5% applies, in addition to their 3% prepared foods tax (for a total tax of 11.5%). By contrast, the Village's total tax on comparable prepared foods purchases would be 9%. In other words, our total tax rate is lower on prepared foods, and our "generally applicable" sales tax rate is much lower. The charge that the Village has recently imposed was selected in large measure because it helps to share the charge with non-residents.
The Village is presently working on a number of new additions to our area restaurants and eating establishments, and looks forward to new businesses continuing to be attracted to the safety and growth of the community. We will be working with our business community to implement the charge, and to continue the Village's fiscally responsible practices.