 Illinoisans pay higher gasoline prices than residents in all neighboring states,
according to AAA. Yet some groups are pushing a hike on gas taxes as a way to
raise revenue, though research indicates that doing so would hit lower-income
families hardest.
Joe Sweeney of the Indiana, Illinois, Iowa Foundation for Fair Contracting
claims that Illinois’ fuel tax isn’t high enough because the state hasn’t raised
the tax since 1993. Sweeney proposes tying the growth in the gas tax rate to
inflation.
“If the motor fuel tax had kept up with inflation in 2015, we would have been at
31 cents per gallon and the diesel tax would have been at 35 cents per gallon,”
Sweeney said, according to the Illinois News Network.
The current state excise tax on gasoline is 19 cents per gallon. But Illinois’
gas taxes are multilayered. In addition to the state excise tax, Illinois also
levies an environmental gas tax and applies the state’s sales tax
Illinois Petroleum Marketers Association and Association of Convenience Stores
Executive Vice President Bill Fleischli criticized Sweeney’s proposal, saying
that increasing the gas tax would put Illinois at a competitive disadvantage
with neighboring states, Illinois News Network reports.
“The last time the motor fuel tax was raised, volumes decreased by 7 percent. If
you allow us to compete and not raise taxes, gallonage and revenue will
increase,” Fleischli said in a statement reported by Illinois News Network.
How gas taxes affect Illinois drivers
The average retail price of a gallon of unleaded gas in Illinois is $2.36, while
the national average is $2.33, according to AAA. Though Illinois’ gas price is
only 3 cents higher than the national average, Illinois’ gas prices are higher
than those in all of its neighboring states. Of Illinois’ bordering states,
Missouri pays the lowest, at only $2.10 per gallon on average.
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A 2012 study from the Brookings Institution showed that increases
in the price of gas hurt lower-income families. The report studied
2010 gas prices and found that low-to-moderate income households
that owned cars drove 10,000 miles and spent $1,500 on fuel at
2010’s average price of $2.80 per gallon. The study found that each
$1 increase in the price of gas would cost these low-to-moderate
income motorists an additional $530 annually.
Though Springfield lawmakers are all too happy to pitch new tax
hikes – without making spending reforms – tax hikes on widely
consumed products like gasoline are regressive. Tax increases on
fuel would make trips to the gas station more costly for
middle-class and lower-income drivers. Illinois also has the
seventh-highest combined state and average local sales tax burden in
the country and some of the highest property taxes nationwide,
further hurting struggling residents. Taxing consumption – the
buying and selling of goods – is a better model than taxing work (in
the form of income taxes). Nine states do not even have state income
taxes on wages. But taxing both consumption and income at the same
time, and then continuing to increase the tax burden, is unfair.
And Illinois’ budget stalemate hasn’t changed residents’ tax
fatigue.
Polling conducted in February and March by Fabrizio, Lee &
Associates and commissioned by the Illinois Policy Institute shows
that a majority of Illinois voters want a budget without tax hikes,
and increasing the gas tax would go against this.
Moreover, not all gas tax dollars go toward infrastructure. Revenue
accrued from the state sales tax portion of the gas tax goes into
the state’s general fund. And historically, new revenue from other
kinds of tax hikes hasn’t even gone to new or existing services or
projects, but to the state’s pension obligations. In fact, nearly 90
percent of the new revenue acquired through the 2011 tax hikes went
to pensions.
Lawmakers should think twice before raising the state gas tax.
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