by
Lawrence J. McQuillan, PhD
Chief
Economist
As
Illinois motorists hit the road for Labor Day weekend, they’ll shell out an
average of $4.14 for a gallon of gas.
In
Chicago, motorists are paying $4.31 a gallon, according to the AAA.
That’s
a whopping 48 cents more than the national average at $3.83 a gallon.
At
these prices, motorists in Chicago are paying a staggering 80.2 cents per
gallon in taxes, or nearly 20 percent.
But it doesn’t have to be this way.
The
graphic below shows the breakdown of the various federal, state and local taxes
on gas.
Traditional
gas taxes like “motor fuel taxes” are a fixed amount per gallon. These taxes
generally pay for road maintenance and other transportation expenses. Combined,
the federal, state, county and Chicago motor fuel taxes total 48.4 cents per
gallon. The state also charges environmental taxes of 1.1 cents per gallon.
In
addition to these motor fuel taxes, the State of Illinois, Cook County and the
City of Chicago also charge sales
taxes on gas. Illinois
is one of only seven
states
that charge a sales tax at the gas pump!
Currently,
the state’s 6.25 percent sales tax adds nearly 20 cents per gallon to the price
of gasoline in Chicago. The county and city sales taxes add an additional 11
cents per gallon to the price. The 31 cents of sales taxes account for nearly
40 percent of total taxes on gas.
These
sales taxes don’t appear on your receipt like they would in a restaurant or
store. Instead, they are hidden by being built into the price. And unlike the
motor fuel taxes, which are a fixed amount per gallon, the sales taxes are set
as percentage rates. So as gasoline costs rise, the amount of sales taxes you
pay increases.
Additionally,
revenue generated by the state sales tax on fuel goes toward different purposes
than motor fuel taxes. Rather than being spent on roads and transportation
services, a significant portion of sales tax revenue goes to the state’s
General Fund, which can be spent on a variety of purposes from pensions to
human services.
This looks like double taxation to me.
As
for consumers, what difference does it make paying a few cents more in sales
tax? If you fill up your car’s 15-gallon tank twice a month, you are paying more
than $110 annually in sales taxes on gas at the current price because Illinois chooses
to implement regressive double taxation of gas.
Illinois
should follow the lead of the 43 states that don’t charge a sales tax on
gasoline and end this practice, saving taxpayers millions of dollars.
Something
to think about when you fill up your tank.
