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*** UPDATED x1 *** Chamber supports huge gas tax hike, but with a budgetary catch

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* Greg Hinz

In a sign of which way the political winds are blowing in Springfield, a major business group today came out in favor of a big increase in the state’s tax on gasoline and diesel fuel to pay for needed improvements in roads, bridges, transit and other transportation projects.

In a statement and interview—and in a piece of legislation introduced on its behalf—the Illinois Chamber of Commerce proposed a plan that would inject an additional $2 billion a year into the state budget for transportation, largely by raising the state’s motor-fuel tax from 19 cents a gallon now to 44 cents.

The measure sponsored by Rep. Andre Thapedi, D-Chicago, would partially compensate motorists by, over a five-year period, phasing out most of the state’s current 5 percent sales tax on sales, which has amounted to a tax on a tax. […]

Maisch said he has met with all four legislative caucuses and officials in Gov. J.B. Pritzker’s office, none of whom have endorsed any plan but all of which listened.

By my rough calculations (4.8 billion gallons sold a year, times $2.14 a gallon - which is the approximate price without all taxes - and calculating 5 percent of that), eliminating the state sales tax on gasoline would cost the annual GRF budget roughly $500 million.

The bill is here.

Related…

* Measure allowing local gas tax on top of state gas tax approved in committee: “This bill gives an opportunity for the locals to impose a 3 cents a gallon motor fuel tax,” said state Rep. Mike Zalewski, D-Riverside. “I intend to have fuller discussions with the transit board and all interested stakeholders including labor.” The amendment passed without debate, 8 to 7. During the vote, state Rep. Margo McDermed, R-Moneka, explained her no vote. “I’m not sure why we’re doing this one off when we need an overall solution to revenue in this area, so I’m a ‘no’,” McDermed said.

* Illinois Chamber of Commerce introduces its own, smaller, capital plan a week after Local 150’s

*** UPDATE *** Press release…

The Illinois Petroleum Marketers Association (IPMA) and the Illinois Association of Convenience Stores (IACS) released the following statement pushing back against any increase in the state’s gas tax. The latest proposal would more than double the tax Illinois residents already pay for gasoline from 19 cents a gallon to 44 cents a gallon.

“Raising the state gas tax would push more customers to purchase gasoline and other goods outside of Illinois. Illinois already has the tenth highest gas tax in the nation and is one of eight states that also adds sales tax to the price of motor fuel,” said Bill Fleischli, executive vice president, IPMA-IACS. “Any increase would adversely impact low and middle-class families trying to get to work and school, as well as have devastating consequences on our local convenience stores, particularly those along the borders that are already competing for business with our surrounding states.”

A recent poll by AAA found that nearly 74 percent of Illinoisans do not support raising taxes to make improvements to infrastructure. Gas stations and convenience stores along the border have been hit especially hard by increased taxes. The state has already seen 700 gas stations close and a reduction of 9,000 employees in this industry in the last five years. The last time the motor fuel tax was increased, convenience stores and gas stations saw volume losses of 3 to 6 percent. Further, when consumers purchase gasoline in neighboring states, they purchase other goods as well, such as candy, beverages and food, which results in additional losses of 8 to 10 percent. This makes it harder for businesses to survive and results in lost revenue for the state.

posted by Rich Miller
Thursday, Mar 28, 19 @ 2:42 pm

Comments

  1. It begins discussion. At some point, a vehicle mileage tax to address the increase in electric vehicles will need to be considered. But that is still a couple of years out. And the need to increase funds for transportation is now.

    Comment by Bogey Golfer Thursday, Mar 28, 19 @ 2:47 pm

  2. Does that sales tax revenue go into the general fund?

    So, with a negative perspective, this would mean taking $500 million that goes into State services to raise $2 Billion to go to….the transportation industry?

    Comment by NIU Grad Thursday, Mar 28, 19 @ 2:48 pm

  3. ===go into the general fund? ===

    Yep.

    Comment by Rich Miller Thursday, Mar 28, 19 @ 2:51 pm

  4. So local governments would still get their part of the sales tax? The State would still collect the 1.25% that gets doled out to munis and counties?

    Comment by Perrid Thursday, Mar 28, 19 @ 2:55 pm

  5. NIU grad,
    Not sure what they taught you at NIU, but the $2 billion goes to fix and maintain our roads, bridges and transit. The “transportation industry” builds the transportation that you use.

    Comment by Bored Chairman Thursday, Mar 28, 19 @ 2:56 pm

  6. If you ask most Illinoians I suspect they would tell you that the tax they pay on gasoline is supposed to pay for roads. That is the case in most other states, but not in Illinois.

    Also consider that a sales tax on gasoline increases as the price of gas goes up. That means at the very times when motorists are fuming at high gas prices, Illinois has effectively increased the price per gallon through the sales tax. By comparison the motor fuel tax isn’t subject to the volatility in the petroleum market, and that means it doesn’t enhance that volatility the way the sales tax does.

    Rep Thapedi’s proposal looks like a good place to start the discussion.

    Comment by muon Thursday, Mar 28, 19 @ 3:07 pm

  7. Bored: I’m just talking messaging, especially as the business community is building arguments against a different type of tax increase.

    Comment by NIU Grad Thursday, Mar 28, 19 @ 3:07 pm

  8. IMHO, the average gal isn’t going to be happy with this. That’s a major increase for the average gal. If you figure a fill up is 15 gallons @ .44 is a $6.60 increase for each fill up. There’s gonna be a lot of unhappy campers with that. I’m not saying it isn’t needed but the lack of leadership on this over the years isn’t helping acceptance.

    Comment by NeverPoliticallyCorrect Thursday, Mar 28, 19 @ 3:14 pm

  9. NPC, it’s actually a 25c increase if you subtract the existing tax from the proposed. So $3.75 extra for a 15 gallon fill up.

    Comment by Six Degrees of Separation Thursday, Mar 28, 19 @ 3:21 pm

  10. That’s going to bite pretty hard into the Tax Cut that 97% of us are getting.

    Comment by ChrisB Thursday, Mar 28, 19 @ 3:24 pm

  11. And the elimination of 5% portion of the sales tax would reduce the overall cost of the 15 gallons by $1.60, based on Rich’s base price. So less than $2 of overall impact per tank if sales tax plan is enacted with the per gallon increase.

    Comment by Six Degrees of Separation Thursday, Mar 28, 19 @ 3:26 pm

  12. Actually $2.15 per 15 gallon tank with the sales tax offset included. But you can bet something would also be needed to fill the $500M hole in the general fund.

    Comment by Six Degrees of Separation Thursday, Mar 28, 19 @ 3:29 pm

  13. This get the chamber a seat at the table.

    Comment by wordslinger Thursday, Mar 28, 19 @ 3:30 pm

  14. It’s predictable that the Chamber favors hiking a regressive tax, in a state that already has one of the more regressive state and local tax systems, but staunchly opposes a progressive income tax. Why is it that imposing a higher effective tax rate on the poor is desirable, but anathema for the rich?

    Comment by anon2 Thursday, Mar 28, 19 @ 3:51 pm

  15. I’m glad this conversation is happening. Simple and transparent.

    They should also start talking about taxing services in exchange for lowering the overall sales tax rate?

    Comment by City Zen Thursday, Mar 28, 19 @ 3:56 pm

  16. If a gas tax capital bill comes up for a vote, I predict some Republicans will get on board. Just like the Chamber, they have no compunctions about making an already regressive tax system more so, but never less so.

    Comment by anon2 Thursday, Mar 28, 19 @ 4:02 pm

  17. If you aren’t on a job giving you a pay raise: your standard of living will be going down.

    Comment by Steve Thursday, Mar 28, 19 @ 4:15 pm

  18. Why is it called “class warfare” to ask those who can best afford it to pay more via JB’s progressive income tax, but never called class warfare to ask those who can least afford it to pay more, as through a huge, regressive gas tax hike?

    Comment by anon2 Thursday, Mar 28, 19 @ 4:15 pm

  19. ==Why is it called “class warfare”==

    How about we implement smart gas pumps that can detect your VIN number, map it back to the KBB value of your car, then charge a gas tax based on that value? That way the guy filling up his Lambo can pay $10 per gallon. Would that be more fair?

    If you can afford an $80,000 Ford F-350, you can afford the gas tax to fill it up.

    Comment by City Zen Thursday, Mar 28, 19 @ 4:22 pm

  20. I mean, wouldn’t the chamber want to REDUCE stress on the GRF need that would be otherwise made up through income taxes on high income earners and corporations?

    Comment by Ok Thursday, Mar 28, 19 @ 4:29 pm

  21. A regressive gas tax supported by a business group? I’m shocked. With the impending advent of electric cars, the gas tax ought to be replaced with an increase in annual auto licensing fees, and I like CZ’s idea of luxury vehicles paying more.

    Comment by PublicServant Thursday, Mar 28, 19 @ 4:43 pm

  22. ===If you can afford an $80,000 Ford F-350, you can afford the gas tax to fill it up===

    City- given that many of your comments are sarcasm, I am not sure you are being serious. If so, you get my comment of the day award.

    I understand the regressiveness of a gas tax on the many people who commute long distances for work.

    But in the far northwest suburbs and probably everywhere else, I see many people driving full size pickups and large SUV’s. And I agree with your comment. If you can afford the truck, you can afford the tax.

    Lastly many of the pickup trucks I see have large off road tires which is harder on roads. And that also applies to the large SUV’s.

    In the 60’s most cars and pickup trucks had passenger car tires. Now many people are essentially driving trucks with off road tires which is hard on pavement. Those people should pay an “infrastructure” tax or a higher gas tax for the wear and tear their massive vehicles do to our roads.

    Comment by Big Jer Thursday, Mar 28, 19 @ 4:54 pm

  23. Illinoisans, like most Americans, consider cheap driving a birthright, so to raise enough revenue to keep our infrastructure going, runs right up against this cultural and emotional brick wall, especially those living in the “virtuous” countryside.

    Comment by VerySmallRocks Thursday, Mar 28, 19 @ 5:00 pm

  24. If I may paraphrase Daniel Burnham, no small taxes.

    That should be the new state motto.

    And as Illinois continues to pursue the highest total tax burden in the nation, the residents ponder what they actually receive in terms of services.

    Comment by SSL Thursday, Mar 28, 19 @ 5:58 pm

  25. How does the Illinois Petroleum Marketers Association and Convenience Stores suggest we pay to maintain the roads their industries rely on? I want to pass a law where anyone who shoots down a tax increase has to justify it, say either the suggested spending is not needed or suggest the cuts. Violators will be mocked on the floor of the House and Senate for the fools that they are and all parties will pitch in for ads statewide mocking their empty words.

    Comment by Perrid Friday, Mar 29, 19 @ 8:22 am

  26. == If you can afford an $80,000 Ford F-350, you can afford the gas tax to fill it up. ==

    Agreed. Someone driving a 19-year old beater, living paycheck to paycheck, not so much.

    Comment by anon2 Friday, Mar 29, 19 @ 11:15 am

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