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 Illinois is one of seven states that charge a sales
tax on gasoline, which means as fuel prices surge, so, too, does the amount
drivers pay the state. How much? About $200 per year on average, assuming gas
prices as of July 27.
When Illinois gas prices are compared to neighboring states, the sales tax
burden becomes clear. All six of Illinois’ neighbors have fuel costs that are
roughly 40 to 80 cents cheaper than the average Illinois price.
The sales tax is one of the largest contributors to the high price. After
accounting for local regulations, the combined sales tax rate increases the
price of gasoline by 8.81% on average. Adding the sales tax to the eight other
federal, state and local fees makes it clear why Illinois is witnessing some of
the highest gas prices it has seen in state history.
The sales tax on gasoline also imposes double taxation on Illinoisians. Some
fees, such as the environmental and underground storage fees, are added to the
price of gas before the sales tax is calculated. That means sales taxes are
charged on other taxes.
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Gas sales taxes hurt Illinoisans’ budgets, plus they do little to truly help the
state budget thanks to history of wasteful spending. Illinoisans couldn’t trust
state leaders to spend transportation funds on transportation projects, so they
passed the Lockbox Amendment in 2016 to stop fund raiding. The sales tax,
however, is exempt from that restriction because the money goes into general
revenues where state leaders can spend it as they see fit.
Gov. J.B. Pritzker has continued the tradition of freely spending transportation
funds on questionable projects, including $1.4 billion on pork projects that do
little to ease or smooth out the average driver’s commute.
The $200 burden of the gas sales tax won’t be going away anytime soon. As
inflation continues to rise, the sales tax will see further increases because of
its variable nature.
Illinois should join the majority of states and dump its sales tax on gas. At a
minimum, it shouldn’t charge tax on other taxes.
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