1 percent grocery tax to resume, gas tax to increase as new fiscal year
begins July 1
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[June 28, 2023]
By JERRY NOWICKI
Capitol News Illinois
jnowicki@capitolnewsillinois.com
SPRINGFIELD – A new state fiscal year will begin July 1, ushering in the
reinstatement of a 1 percent tax on groceries and a second increase to
the state’s motor fuel tax in 2023.
Amid record-high inflation last spring, the General Assembly temporarily
waived Illinois’ grocery tax for the coming fiscal year and delayed the
annual increase in the state’s motor fuel tax for six months. Democrats
introduced both those measures as part of a larger tax relief package
that drew criticisms for its proximity to the November general election.
“What we did last year was a temporary measure because we had very high
inflation,” Pritzker said when asked at an unrelated news conference
Tuesday whether the changes were election-related. “Inflation, you may
notice, has come down.”
Inflation was approaching 9 percent when the tax relief plan passed last
year, according to the U.S. Bureau of Labor Statistics, but it was 4
percent last month when the fiscal year 2024 was budget passed.
The Pritzker administration estimated at the time the temporary pause on
the grocery tax would cost the state $400 million. Most grocery tax
revenues are distributed to local governments, so last year lawmakers
directed state general revenue funds to reimburse local governments for
any financial hit they would have taken due to the pause.
“I would like very much to eliminate entirely the grocery tax, but it is
a matter of local governments and what they would do if they didn't have
that income as a result of the grocery tax,” Pritzker said, faulting
Republicans for “complaining” about the tax being reimposed without
offering revenue alternatives.
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Gov. JB Pritzker is pictured in a file
photo at a news conference at Schnucks grocery store in Springfield
last year. (Capitol News Illinois photo by Jerry Nowicki)
The motor fuel tax on gasoline, gasohol and compressed natural gas,
meanwhile, will increase by 3.1 cents on July 1, to 45.4 cents per
gallon. The tax rate for diesel fuel will also increase by 3.1 cents, to
52.9 cents per gallon.
The automatic increase in the fuel tax at the beginning of the new
fiscal year is an annual process that became law in 2019 with bipartisan
support. Lawmakers doubled the motor fuel tax and indexed it to increase
at the rate of the federal government’s Consumer Price Index each year.
The motor fuel tax revenue, combined with one-time increases to license
and registration fees that took effect in 2020, provided the funding
backbone of the state’s $33.2 billion six-year infrastructure plan for
road and bridge upkeep, dubbed Rebuild Illinois.
According to the governor’s office, Rebuild Illinois has funded $10.9
billion of upgrades as of March 31, including 4,913 miles of roads, 479
structures, and 709 other safety improvements.
Last year’s July 1 motor fuel tax increase was delayed six months, so
the per-gallon tax already increased by 3.1 cents in January. Pritzker
last year estimated that the temporary pause on the gas tax hike would
have saved consumers about $70 million.
As part of last year’s tax relief plan, lost motor fuel tax revenues
were replaced by money from the state’s Leaking Underground Storage Tank
fund, which is historically paid into by fees and fines related to
underground chemical storage tanks, such as those at gas stations.
Capitol News Illinois is a nonprofit, nonpartisan news
service covering state government. It is distributed to hundreds of
print and broadcast outlets statewide. It is funded primarily by the
Illinois Press Foundation and the Robert R. McCormick Foundation, along
with major contributions from the Illinois Broadcasters Foundation and
Southern Illinois Editorial Association.
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