Illinois
High gas prices mean Illinois’ sales tax adds $200 a year
Surging gasoline costs imply Illinois is getting a lift in gross sales taxes from gas, however that’s as a result of drivers are paying the additional $200 a yr. Most states don’t cost gross sales tax on gasoline, however Illinois provides it atop different taxes – taxing the taxes.
Illinois is one in all seven states that cost a gross sales tax on gasoline, which suggests as gas costs surge, so, too, does the quantity drivers pay the state. How a lot? About $200 per yr on common, assuming gasoline costs as of July 27.
When Illinois gasoline costs are in comparison with neighboring states, the gross sales tax burden turns into clear. All six of Illinois’ neighbors have gas prices which might be roughly 40 to 80 cents cheaper than the common Illinois value.
The gross sales tax is among the largest contributors to the excessive value. After accounting for native laws, the mixed gross sales tax charge will increase the worth of gasoline by 8.81% on common. Including the gross sales tax to the eight different federal, state and native charges makes it clear why Illinois is witnessing among the highest gasoline costs it has seen in state historical past.
The gross sales tax on gasoline additionally imposes double taxation on Illinoisians. Some charges, such because the environmental and underground storage charges, are added to the worth of gasoline earlier than the gross sales tax is calculated. Which means gross sales taxes are charged on different taxes.
Gasoline gross sales taxes harm Illinoisans’ budgets, plus they do little to actually assist the state finances because of historical past of wasteful spending. Illinoisans couldn’t belief state leaders to spend transportation funds on transportation tasks, so that they handed the Lockbox Modification in 2016 to cease fund raiding. The gross sales tax, nonetheless, is exempt from that restriction as a result of the cash goes into common revenues the place state leaders can spend it as they see match.
Gov. J.B. Pritzker has continued the custom of freely spending transportation funds on questionable tasks, together with $1.4 billion on pork tasks that do little to ease or easy out the common driver’s commute.
The $200 burden of the gasoline gross sales tax received’t be going away anytime quickly. As inflation continues to rise, the gross sales tax will see additional will increase due to its variable nature.
Illinois ought to be a part of nearly all of states and dump its gross sales tax on gasoline. At a minimal, it shouldn’t cost tax on different taxes.