Illinois Retail Merchants Association’s Rob Karr talks about the vendor discount
A proposed policy change that would allow the state to capture more revenue is being called “theft of services” by retailers.
Gov. J.B. Pritzker has proposed the change as one option to help balance his budget. Bills that would change the existing law remain in a committee. Pritzker’s proposal hasn’t been put into bill form.
Pritzker hopes to get an additional $170 million from recreational pot licenses for his budget that starts this summer. He’s also banking on $212 million from sports betting licenses. Both ideas have yet to advance at the statehouse. Then there’s the “retailers discount” the governor hopes to change to bring in $75 million.
Retailers get to keep 1.75 percent of the overall state sales tax they collect for the state for acting as the state’s sales tax collector. Illinois Retail Merchants Association’s Rob Karr said that doesn’t even cover the processing fees for electronic transactions, which he said make up almost 70 percent of sales. Pritzker wants to cap that reimbursement at $1,000 a month per retailer, Karr said.
“We are subsidizing the state somewhere between four and five cents for every electronic transaction so clearly it is a reimbursement to us and to take it away frankly or reduce it truly amounts to theft of services,” Karr said.
All retailers, big and small, will be impacted if Pritzker’s plan is approved, he added.
“The claim is that it only, quote-unquote, affects the large retailers, but a large/small retailer isn’t the case here,” Karr said. “The fact is they are both providing identical services. They are both paying identical [electronic transaction processing fee] costs based on how many customers they have going through their door so this is one issue that trying to play the large-versus-small card is not intellectually accurate.”
A hearing for the House version of the idea is scheduled in a subcommittee this week, but a subject matter hearing on sports betting could take priority. A Senate version of the discount cap also remains in committee.
The next budget, relying on such caps and other new revenue streams that have yet to fully materialize, begins July 1.