Proposed freeze to annual gas tax increase ‘falls short’ of relief, retail group says

[February 04, 2022]  By Greg Bishop

(The Center Square) – Some are pushing back on Gov. J.B. Pritzker's proposal to freeze the annual gas tax increase.

Gov. J.B. Pritzker says it’s his because of his administration’s management of state finances, not tens of billions of dollars in federal COVID-19 relief funds, that he’s able to offer $1 billion in tax relief in the upcoming fiscal year. The plan includes freezing sales taxes on groceries and providing up to $300 per household in property tax rebates.

Among the tax relief proposals is Pritzker’s plan to freeze the annual gas tax increase set for July 1.

In 2019, lawmakers approved doubling the state gas tax and increasing it every year linked to inflation. Pritzker signed the measure into law.

“Since then, countless roads and bridges across the state have been repaired and improved to the benefit of local communities and businesses and the federal infrastructure bill passed last year by Congress has provided additional funding,” Pritzker said during his budget address Wednesday.

Illinois now has the second highest gas tax in the nation.

Josh Sharp with the Illinois Fuel and Retail Association said the state is getting more than $2 billion in motor fuel tax revenue a year from the state's taxes. And while the state needs real tax relief, Sharp said Pritzker’s plan falls short of that.
 

“You could simply reduce the sales tax right now, which is 5%, or you could also do something to stop all of the other tax pyramiding that goes on top of that,” Sharp told The Center Square.

One example Sharp said should be addressed is how in Chicago there are layers of taxes in addition to the state’s sales tax on top of the state’s motor fuel tax.

“You have the city of Chicago sales tax, then you have the city of Chicago’s motor fuel tax in addition to the same for Cook County,” Sharp said. “So that’s almost six layers that are stacked up on top of what is already a very expensive gallon of fuel to begin with.”
 

There is a measure at the statehouse that would allow other communities other than larger so-called home rule communities to levy a local sales tax on gasoline. The bill’s sponsor said they continue to hear from all sides of the issue.

The Transportation for Illinois Coalition said the savings from Pritzker’s proposed freeze in the annual increase would amount to around $1 per fill up.

Illinois Asphalt Pavement Association Executive Vice President Kevin Burke said providing relief from record inflation is good, but a $135 million statewide impact to the road fund could lead to the loss of some projects.

“That’s anywhere from 20 to 30 resurfacing projects around the state,” Burke told WMAY.

If not changed by the Legislature, the annual gas tax tied to inflation will kick in on July 1.