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NEW STUDY: Illinois Video Gaming Estimates Vastly Understated; More Reason to Drop Alcohol Tax Hike

July 8, 2009 08:00 PM

Hospitality Industry Points to New Study as Reason to Drop Alcohol Tax Hike

SPRINGFIELD, IL – The Illinois State Legislature’s $375 million revenue estimate from a new tax on video gaming is at least $165 million too low, according to a new study of other states with legalized video gaming machines.  Citing this new data, Illinois’ hospitality industry again called on Governor Quinn to veto the proposed alcohol tax hike, saying that the legislature’s under-accounted for windfall would more than cover any alcohol tax gains.

“Each extra dollar of revenue from gaming represents one more reason not to punish the state’s bleeding hospitality industry through higher alcohol taxes,” said Distilled Spirits Council Vice President Dale Szyndrowski, who noted that Illinois’ hospitality industry has already lost over 18,700 jobs in the past year due to the recession.  “A tax on alcohol hurts the restaurant, hotel and tourism industries and will destroy thousands more jobs among those least able to afford it.”

The new study, conducted by Arduin, Laffer & Moore Econometrics (ALME), found that based on the experiences of other states that have legalized video gaming, the Illinois State Legislature’s $375 million revenue estimate is far too conservative.  ALME estimated that the average revenue experience from other states could justify revenues of at least $540 million – or, a $165 million tax revenue windfall for the state of Illinois.  The report found revenue forecasts could be as high as $1.7 billion.

“Clearly, the revenues that Illinois is projecting are on the low side of what a reasonable economic analysis would show,” said Dr. Wayne Winegarden, author of ALME’s study. “You can only come up with $375 million by using pessimistic assumptions.” 

The hospitality industry again called on Governor Quinn to veto the alcohol tax provision within the legislation.

“Here's an opportunity to save thousands of jobs in Illinois’ hard-hit hospitality industry,” Szyndrowski said.  “Forcing thousands of waiters, waitresses, bartenders and busboys into the unemployment line is no way to shore up the state’s economy.  Governor, do the right thing.”

Szyndrowski pointed to an economic analysis which showed that House Bill 255’s 90% tax increase on alcohol would cause Illinois retailers to lose an estimated $225 million in retail sales and destroy another 4,500 hospitality sector jobs across the state. 

For a copy of ALME’s study on the estimated revenues from a new video gaming tax in Illinois, please contact Ben Jenkins at bjenkins@discus.org.

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