If Illinois hikes gas tax, expect more drivers to buy across state lines
Illinois already taxes 20 cents more per gallon of gasoline than Missouri. If state lawmakers add another 30 cents per gallon, expect an exodus of southwestern Illinois drivers buying gas and more in St. Louis.
For any Illinois state lawmakers thinking about raising gasoline taxes as much as 30 cents a gallon, southwestern Illinois drivers have a simple message: Don’t.
They said they are already overtaxed, and already fill up in nearby St. Louis when possible.
“It’s stupid. When you’ve got a state 15 miles away with cheaper gas, you’re not going to get any of that business here,” said Art Gantner as he filled up in his hometown of Belleville, Illinois. “They need to remember they are driving people away from the state instead of bringing business in, same way as with the cigarette tax. All these taxes are on the middle-class people all the time.”
Lawmakers fail to fight for real solutions such as balancing the budget and just fall back on tax hikes, said Mike Whittimore, also of Belleville.
“It fascinates me that with all the challenges our state has that they think increasing taxes is the best possible solution to their problems, especially on a consumable like gas that we need to get to work, to be a family and to live our lives,” Whittimore said.
Higher taxes drive shoppers and eventually employers and jobs out of Illinois, something Robert Forsyth, president of Moto Inc., understands after investing heavily in his 79th convenience store, locating it in his corporate hometown of Belleville. He said the new store is a risk.
“This part of the state is not an attractive economic environment. Manufacturing is not doing well, lots of business are impacted by higher taxes,” he said.
If Illinois imposes a 30-cent gasoline tax hike, that will mean Missouri stations will on average get a 50-cent per gallon advantage, according to research from the nonpartisan Tax Foundation. Illinois’ gas tax would be far higher than every neighboring state under such a hike, not just Missouri.
Forsyth said the current 20-cent difference with Missouri already makes a big impact.
“Go over to our MotoMart on Riverview Drive, the first stop in Missouri, and look at all the license plates from Illinois,” said Forsyth, whose gas and convenience stores operate in six Midwest states. “People underestimate the economic impact of people choosing to buy gas out of Illinois, and they will make a trip to do that.”
More than 800,000 people live in Illinois counties that border Missouri, according to 2016 Census estimates.
In addition to Missouri, Illinois already charges more in gas taxes than neighboring Wisconsin, Iowa and Kentucky. Meanwhile, drivers in Indiana and Michigan see average gas taxes that are about 5 cents and 7 cents per gallon higher than in Illinois, respectively. Both states rank in the top 10 nationally for average state and local gas taxes.
Forsyth said raising the gas tax heavily impacts border areas, which are already suffering economically. He said drivers making the trip to Missouri not only buy gas, but also cigarettes that are nearly $2-a-pack cheaper and then go shopping, especially in the St. Louis area.
He said gas tax proponents are not looking honestly at the numbers, because they use a non-dynamic model that just looks at the tax revenue. They fail to account for the loss of gas sales to other states, for those other purchases and for taxation’s drag on the Illinois economy.
He said Illinois residents with mass transit don’t understand how harmful gas taxes are to lower income people, especially in rural areas.
“Those folks can’t afford fuel-efficient vehicles like I’ve got,” he said. “Not only do gas taxes take a higher percentage of their resources, but they are driving the used gas guzzlers I was driving 10 years ago.”
He said Springfield lawmakers need to face reality.
“If they think they can tax their way out of this Illinois mess, they are crazy,” Forsyth said. “Missouri has a constitutional amendment mandating a balanced budget and must make gut-wrenching decisions every year. Illinois just keeps spending and asking for more as they kick the can down the road. What a mess.”
Jane Petrovi, of Fairview Heights, was filling up at Forsyth’s new station in Belleville, but said that’s unusual for her. She said it won’t happen at all if the gas tax increases 30 cents per gallon, the high end of outgoing Chicago Mayor Rahm Emanuel’s proposal.
“They need to cut the payroll instead of increasing taxes,” Petrovi said. “They need to be more financially responsible, like we all need to be when we don’t have the money.”
Marsha Douglas, of Belleville, is less likely to drive to Missouri to get gas. She said a new tax bite would force her to drive less.
“It would be a big effect on my family. I just wouldn’t go anywhere too much beyond work and back,” she said.
Illinoisans on average already pay the 10th-highest gas tax in the nation at an average of 37.3 cents per gallon, according to the Tax Foundation. Illinois is one of the few states to pile its state and local sales taxes atop its gas taxes – effectively double-taxing drivers at the pump. A 30-cent increase would push Illinois gas taxes well past the current top taxer, Pennsylvania, which averaged 58.7 cents last year.
Nel Millas, of Swansea, said Illinois residents are already overtaxed and she definitely opposed any gasoline tax increase.
“Seems like lawmakers are taking advantage of us,” she said. “Taxpayers pay their fair share already.”
Illinois has not passed a capital funding bill since 2009. Other states provide state-of-the-art infrastructure in low-tax environments as high-tax Illinois falls behind, which raises questions about how Springfield spends existing tax dollars.
In 2017, a federal investigation into hundreds of “staff assistant” hires made at the Illinois Department of Transportation found the agency for years was doling out patronage jobs to politically connected applicants. The agency pushed candidates through the application process with “‘little or no regard’ for actual hiring need, or whether the candidate was qualified for the job,” according to the Chicago Tribune.
In September, the Daily Herald reported the Illinois State Toll Highway Authority board chair had awarded six-figure positions to six political allies totaling nearly $916,000. The agency had also contracted with firms staffed with officials’ family relatives and former political associates for hundreds of millions of dollars.
Fixing patronage and corruption might not be enough to pay for Illinois’ infrastructure needs, but state lawmakers should fix waste and abuse of existing tax dollars before asking drivers for new gas taxes.
A high tax burden is the No. 1 reason Illinoisans say they want to leave the state, and Illinois has seen five consecutive years of population loss. Higher gasoline taxes will not just send people across state lines for a bargain, they may drive them away forever.