By John Byrne
7:14 PM EDT, June 19, 2013
Cook County commissioners voted Wednesday to lower the tax on certain big-ticket items bought outside the county, but the move won't end lawsuits challenging its legality.
The use tax targets companies based in Cook County that go elsewhere to save money on large purchases such as office supplies or equipment worth more than $3,500. Not included under the tax are real estate and vehicles.
The board approved a 1.25 percent use tax late last year as part of the budget. On Wednesday, commissioners reduced it to 0.75 percent, which Board President Toni Preckwinkle said would bring it into line with federal tax rules and bolster the county's case in two lawsuits.
Lowering the tax will cost the cash-strapped county about $5 million this year and $14 million in 2014, according to Budget Director Andrea Gibson. She said the county will consider other ways to replace the "substantial amount" of lost revenue, mentioning a hiring slowdown and spending reduction as options.
Still, J. Thomas Johnson, president emeritus of the Taxpayers' Federation of Illinois, told commissioners Wednesday that even after the rate reduction, the use tax runs afoul of state laws that prohibit counties from imposing such taxes on personal property.
Johnson contended that the county needs to get state lawmakers to change laws on county taxation in order to legalize the use tax. Attorneys for the law firms Reed Smith LLP and Horwood, Marcus & Berk, which filed the suits, agreed that Wednesday's vote still leaves the tax on the wrong side of Illinois statutes governing county taxing powers.
While the attorneys said the lawsuits will continue, Preckwinkle argued that lowering the rate puts the county on solid legal footing in defending the tax in court.
The county collected $1.1 million through the use tax during April, according to Preckwinkle's administration. Some of the companies that paid the tax did so under protest and may be able to recoup some of the payments in light of the tax being lowered.
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