Senate bill to tax home remodeling called a framework for disaster
Homes across Illinois could sit in disrepair and home improvement businesses could take their expertise elsewhere if a bill making its way through the Illinois Legislature is made into law, a remodeling company owner said.
“The worry is that the state is going to put the burden on us,” David Padgett told the Southeast Illinois News.
Padgett is the president of the Home Builders Association of Greater Southwest Illinois and the owner of Padgett Building and Remodeling.
Senate Bill 9 would impose a 6.25 percent sales tax on various kinds of home improvements, and critics say it could also create a lot of additional burdens for homeowners and contractors.
“People already don't like to maintain their homes because of cost,” Padgett said. “That brings down neighborhoods.”
One problem, Padgett said, is that it's hard to decipher which services are selected for taxation.
“We're not sure exactly on the language in the bill,” Padgett said. “What is going to be charged tax?”
Padgett said companies like his might need to prepare more than one contract for a single project in order to comply with the responsibilities for accurate tax filing.
As for smaller shops, he said, many will respond to the new tax by simply taking some of their work under the table.
“They’ll just start taking cash for smaller jobs,” Padgett said.
In addition, he said, some companies might decide to move out of Illinois and focus on work in adjacent states, like Missouri.
“Why are they singling out these specific home-improvement services?” Padgett said. “It's very narrow-based.”
Padgett said Illinois has 168 defined service industries, all of which could theoretically be taxed. He suggested that instead of applying sales tax to the specific home improvement services, legislators should look at offering tax credits to incentivize home improvements.
“It can make the area better -- make the homes nicer,” Padgett said.
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