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 Illinois drivers get splashed with some of highest taxes and
fees when filling up, but it could soon be worse: A pair of bills in Springfield
would spike Illinois’ gas tax burden to the highest in the nation.
Senate Bill 2254 and House Bill 3823 would more than double the per-gallon motor
fuel tax by setting the state tax level to 44 cents from 19 cents over a period
of five years. This increase would come atop the layers of local gasoline taxes,
sales taxes and special fees in Illinois. They would combine to unseat
Pennsylvania for the nation’s highest overall gas tax burden.
The initial increase would take place July 2019, raising the state’s current
19-cent tax to 34 cents per gallon. The tax would rise by 2 cents per gallon
annually until reaching 44 cents in 2024.
Electric cars won’t save drivers from higher state demands. The state currently
requires owners of electric cars to register their vehicle for $35 every two
years. The two bills would change that fee to up to “three times the amount for
an equivalent” fuel-powered vehicle. The registration fee on a standard Illinois
passenger vehicle is $101.
The proposals would add a $50 surcharge atop the annual registration fees for
passenger vehicles and motorcycles, as well as raise by $50 the registration
fees for antique cars and commuter vans.
Each of the state’s four sales and use taxes that apply to gasoline purchases
would spike to 5.25% in 2020, before gradually decreasing back down to the
current rate of 1.25% by 2024.
Pain at the pump
Illinois is one of just seven states that imposes a sales tax on gasoline. But
that’s only one of the taxes hitting residents at the pump. For example, the
typical Chicagoan’s gasoline bill includes the following taxes per gallon:
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A federal motor fuel (excise) tax of 18.4 cents
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State underground storage and environmental fees of a
little over 1 cent
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A slew of sales taxes that total 10.25%*:
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And more state and local motor fuel (excise) taxes:
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19 cent state motor fuel tax
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5 cent Chicago motor fuel tax
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6 cent Cook County motor fuel tax
*How these taxes are layered on matters. Illinois sales taxes
are first applied on the base cost of gas plus the federal tax and environmental
fees. Then, state and local excise taxes are layered on after the sales taxes
are applied. The result is drivers are taxed on the taxes.
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Despite not having hiked its gas tax since 1990,
Illinois’ gas tax remains 10th-highest in the nation, according to
the Tax Foundation.
In 2016, Illinois voters approved an amendment to the state
constitution mandating revenue generated through motor fuel taxes
only be used for transportation projects.
One tax hike could pave way for another
State, local and former officeholders have pressed for a gas tax
hike since December, citing revenue needs for infrastructure
improvements. This is where Gov. J.B. Pritzker likely sees a
political opportunity.
Scrapping Illinois’ constitutional flat tax protection for a
progressive income tax has long been at the top of the governor’s
wish list. But polling has shown the tax to be highly unpopular
among likely voters in key House districts, which could cost
Pritzker the votes needed to pass the proposal.
A gas tax hike wrapped with a capital spending bill would allow
state leaders to dole out special pork projects to districts in
exchange for critical votes. Illinois’ last capital bill passed in
2009 was loaded with special favors. With Pritzker’s progressive tax
ambitions, the next capital bill could be the same.
Given the state’s record of waste and abuse of existing capital
funds, new revenues would not necessarily translate to sturdier
bridges and smoother roads.
Other states have proven able to do more for roads and bridges with
fewer tax dollars. Look at Texas: While it’s true that climate plays
a role in infrastructure needs, Texas’ average gas tax burden is 46
percent lower than Illinois’. The Lone Star State regularly receives
recognition for its best-in-the-nation infrastructure. Not to
mention, Texans don’t pay a state income tax.
Moreover, state leaders should be able to demonstrate to taxpayers
that they’re getting the best bang for their infrastructure buck.
Illinois could achieve this by adopting a scoring model similar to
Virginia’s SMART SCALE, which uses an objective scoring system to
help lawmakers determine the most efficient way to allocate
infrastructure funds.
Rather than hiking taxes on residents who already pay among the
highest rates on gasoline, state leaders need to re-evaluate how
existing tax dollars are spent.
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