Cities have just a few tools in their toolboxes to help stimulate economic development. One such tool is Sales Tax Rebates. State Statute 65 ILCS 5/8‑11‑20 makes this possible. A recent article in regards to just such an agreement brought this to the forefront.
But why would you give sales tax back to a retailer? There are a few reasons, most of those laid out within that very State Statute. And because the State Statute exists, the problem becomes, if we don't do it, odds are another city will. One might say fine, then let them go to the next city that offers a break. Unfortunately, if we did that with every project, there would be a lot fewer projects in town and the retail sector here would be in much worse shape. Retail sales make up our largest revenue source for policing, firefighting, public works and road projects, so it's very important that we strengthen our retail sector and work to expand it. Sometimes that means utilizing a sales tax rebate agreement.
What we don't do. We don't rebate so much as to take a net loss to the City. The goal is to share the new or increased sales tax brought to the community; sales tax that presumably would not otherwise be in our City, but for the agreement that made building or expanding financially feasible.
Incentives may seem like a dirty word, particularly now, but they are something of a necessary evil. Without them, there are a lot of jobs in this community that wouldn't exist, both retail and business/warehouse/industry. Not providing any incentives to businesses and industry only assures us that our City will be the last on nearly so of everyone's choices when it comes to relocating a business or retail opportunity. Yes, the developer gets something back, but what the City and community get back in jobs and taxes far outweighs what is shared in return.
