Mayor Richard M. Daley of Chicago last week vowed the city would phase out an employee head tax that generates $35 million a year if a proposed $2 billion casino-entertainment complex is built on the city's lakefront.

Currently, companies in the city with 15 or more employees must pay the monthly tax, which is $5 per worker.

The mayor said the phaseout of the tax would begin once "the gaming tax revenues are flowing" from the proposed complex, according to Noelle Gaffney, Daley's spokeswoman. She noted that eliminating the tax would help improve the "economic climate" in the city by assisting local businesses.

In March, Circus Circus Enterprises Inc., Hilton Hotels Corp., and Caesars World Inc. proposed to the city a plan to build a privately financed casino-entertainment complex. Legislative approval of land-based gambling and a 10% reduction in the state's gambling tax would be needed to accommodate the privately financed complex.

The mayor has said he would lobby for the casino plan in the fall session of the state legislature, which formally begins Nov. 17.

Gov. Jim Edgar and other state lawmakers have expressed concern about the effect that land-based casino gambling would have on other gambling operations in the state.

During the last legislative session, the House voted to set up a task force to study various aspects of the proposal and report back to the legislature March 1.

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