Keep the suburban shopping mall alive by charging current shoppers an extra 1% tax

Leaders in Skokie, Illinois want to approve a new 1% tax for purchases at Old Orchard mall in order to help keep the shopping mall going:

Photo by Demian Smit on Pexels.com

Skokie lawmakers during their Feb. 7 village board meeting voted 7 to 1 to make the mall a “business district,” under Illinois’ Business District Development and Redevelopment Sales Tax provision, allowing businesses there to charge an extra 1% sales tax. The board will take a final vote on the proposal in March.

The $5 million generated annually by the additional 1% sales tax will be used by Westfield to do about $120 million in upgrades and rehabs in the mall, which is the largest tax generator in the village.

Mayor George Van Dusen said the new tax and upgrades are essential if the mall is going to remain viable…

Creating a “business district” includes designating the area as “blighted” to facilitate development and redevelopment by imposing an additional tax, Village Manager John Lockerby told the board.

“The viability of the mall is critical to the community, applicable school districts as well as other units of government,” he said, adding that the initiative will set the mall up for long-term success.

Shopping malls, in general, are struggling and not all will survive. This move is intended to help keep Old Orchard going amid tough conditions with COVID-19 and online retail.

But, this is an interesting choice. Here is a few reasons why:

  1. It takes money from private consumers to fund private development through and to ensure local tax monies. The profits go to the mall developers and the community benefits from ongoing tax revenues, jobs, and shopping opportunities. Would this be appropriately termed a “public-private partnership” or a “taxpayer subsidized” project?
  2. As the article notes elsewhere, other communities could use similar tactics to establish “business districts” and keep their own shopping centers alive. Does this just keep the competition going?
  3. The goal is to keep the mall going because it is already there. Is it a sunk cost? What other good might be done in the community with $5 million annually?

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