Illinois drivers surrounded by states with lower gas tax rates

Illinois drivers surrounded by states with lower gas tax rates

Illinois doubled the gas tax in 2019, which pushed it to No. 3 in the nation for highest average gas tax.

Illinois ranks third-highest for gasoline taxes in the U.S., according to a new report from the Tax Foundation.

Illinois was No. 10 in 2018, before the state doubled its share of the gas tax to support a $45 billion infrastructure plan primarily pushed by state lawmakers who have since been indicted or implicated in federal corruption probes. Illinois rose to No. 3 immediately after doubling the gas tax and maintained that spot this July with the automatic hike lawmakers built in to the gas tax formula.

The high tax is especially a problem for Illinois gas station owners along the 361 miles of state border with Missouri: Missouri gas taxes are the nation’s second-lowest, nearly 35 cents per gallon less that Illinois.

“It’s been quite devastating, and the reality is that it’s not going to get any better because every year it’s going to get higher,” said Matt Schrimpf, owner of Piasa Motor Fuels near Alton, Illinois.

Schrimpf’s business is transporting fuel in Illinois and Missouri. He said the stores he delivers to in Illinois are at a severe disadvantage. He’s seen their demand decline because it’s easy for Metro East residents to fill up on gas nearby in the St. Louis area.

Illinois gas on average is taxed 52 cents a gallon with state, local and federal taxes. The Tax Foundation used data from July that included Illinois’ first automatic increase of 0.7 cents a gallon. State lawmakers decided the gas tax will automatically rise each July based on inflation as of March, not to exceed a penny a year.

Illinoisans will save gas taxes by crossing the state line regardless of the direction they travel. Missouri saves them the most, but Kentucky saves them 26 cents a gallon, Iowa nearly 22 cents and Wisconsin a little more than 19 cents. Indiana saves the least, at less than a nickel.

That 19-cent savings is enough to threaten Sam Dharni’s Shell station in far north suburban Antioch. His nearest competitor is just 100 yards across the state line in Salem Lakes, Wisconsin.

“They should be more competitive with other states on all taxes, not just the gas tax,” Dharni said. “They should spend based on the revenue. And then they should fix their internal problems – where the money is being spent – instead of robbing people.”

Three leaders in the state legislature who in 2019 were intimately involved with the infrastructure bill and gas tax to help support it are now facing indictments or are implicated in federal corruption probes. Illinois House Speaker Mike Madigan was tied to a $1.3 million bribery scheme involving Commonwealth Edison, with federal grand jury subpoenas served on his office and AT&T for allegations involving lobbyists and contracts for political allies. Former state Sen. Martin Sandoval was indicted for bribery and tax fraud after championing the gas tax. Former state Rep. Luis Arroyo was indicted for bribery after leading committees instrumental in passing the tax and construction bill.

All three plus two other state lawmakers involved in federal corruption probes, state Sen. Terry Link and state Sen. Tom Cullerton, were boosters of another tax hike proposal, the “fair tax” Gov. J.B. Pritzker is pushing with $56.5 million of his own money. Pritzker, too, faces a federal investigation of a scheme to remove toilets from his Gold Coast mansion to dodge $331,000 in property taxes.

The “fair tax” referendum on the Nov. 3 ballot would entrust Illinois lawmakers – too many of whom have recently betrayed the public’s trust – with greater power to decide who and how much to charge state income taxes. But because of its potential to hike taxes up to 47% on more than 100,000 small businesses responsible for most of the state’s jobs, and which are trying to recover from COVID-19 mandates, the tax has great potential to drive more businesses and jobs out of Illinois.

Where they will certainly find cheaper gas.

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