Gas Tax Relief – Really?

By Scott Reeder

Illinois politicians must think we are really a dumb bunch, they just passed legislation that requires every gas pump in the Land of Lincoln to bear a sticker telling us the state could be screwing us over even worse at the gas pump.

Of course, they don’t phrase it that honestly. They are, quite literally, giving us their two-cents’ worth. Illinois still will have the second-highest gasoline taxes in the nation – but, hey, our politicians are putting off a two-cent-a-gallon tax hike scheduled for July 1 until January 1, 2023.

Let’s say in July, I were to pull into a service station to fill my pickup with fuel, and I spend $100. (I spent that much two weeks ago – the most I’ve paid in my life at a gas pump.) The legislature wants me to know life could be much worse. If they hadn’t put off the tax increase, I could have paid $100.40. Feeling a little underwhelmed? Well, you ought to be.

In 2019, Gov. J.B. Pritzker and legislative Democrats doubled the state’s gas tax, increasing it from 19 cents a gallon to 38 cents, and added an annual increase tied to inflation. It’s that annual increase for this year that may be suspended for six months, not the doubling of the state gas tax in 2019 or the inflationary increases that already have kicked in since then.

Illinois not only taxes gasoline by the gallon, but it imposes a separate sales tax that taxes it by the dollar. The taxes paid per gallon are used in the basis to determine sales tax on the overall sale. We are taxing taxes.

Josh Sharp, CEO of the Illinois Fuel and Retail Association, said Illinois may be the only state that assesses its sales tax on top of the gas tax. Folks in some parts of Illinois are paying about 50 cents a gallon in state taxes alone. Add on the federal taxes and consumers are paying about 77 cents a gallon in taxes, he said.

That’s shameful, particularly at a time when gasoline prices are at near record levels. Families across the state have suffered through two years of a pandemic and now are struggling against the highest inflation the nation has experienced in nearly 40 years.

If Gov. J.B. Pritzker signs the legislation, every gas pump in the state must have a four-by-eight-inch sticker reading: “As of July 1, the State of Illinois has suspended the inflation adjustment to the motor fuel tax through December 31. The price on this pump should reflect the suspension of the tax increase.”

If a gas station owner does not comply, they would face a fine of $500 for each day they are out of compliance.

“We don’t think the government can compel a business, or a private citizen, or anyone for that matter to utter speech that they don’t want to participate in and, to us, this is a very political speech. It’s right before an election. It’s difficult to make the case there is a public safety aspect to this. It’s a political message. It’s talking about a tax hike,” Sharp said. “This is just an effort to make retailers engage in free political advertising.”

If the legislation is signed into law, Sharp said his organization plans to file a lawsuit to block its implementation on the grounds it violates the free speech rights of his members.

So, where did this notion originate?

Well, it came from that incubator of really bad ideas known as the final two days of legislative session. Rarely do lawmakers become smarter or braver when they can see the end of their work in sight.

The delay of the two-cent-per-gallon tax hike moved its implementation from before the November election to less than two months after. No one, least of all Pritzker, wants to be blamed for $4.50 gasoline.

And in fairness, there is little a governor of any state can do about fluctuating oil prices on the international commodity exchanges. The only thing they can really influence that affects the price of gasoline is how it’s taxed.

How much fuel should be taxed is a valid public policy debate. But instead of making a tough call on reducing state revenue and bringing gas taxes down to be in line with other states, our lawmakers chose a flimsy fig leaf of a sticker to cover their culpability in making Illinois one of the most expensive places in the nation to fill up.

We deserve better.

Scott Reeder, an Illinois Times staff writer, can be reached at sreeder@illinoistimes.com.