There are lots of news stories about Illinois’ gas tax going up on July 1st to 47 cents a gallon from its current tax of 45.4 cents per gallon. The tax that is increasing is the Illinois Part A tax. Part B tax changes at the first of the year and is calculated by multiplying the average cost of gas per gallon in Illinois in the previous year by 6.25%. The federal tax has been unchanged for decades and is 18.4 cents per gallon. Then come county and city gas taxes. Those taxes vary and can be per gallon or a sales tax. To make it more confusing, the sales tax is likely added to the federal and local taxes – or maybe it isn’t. After asking several “experts,” no one could get me a clear answer. However, a retail gas operator did definitively state that the federal gas tax does have a sales tax applied to it. At least in the location where his station is in Illinois –
Meaning that, Yes, in Illinois, you are taxed on a tax.
In 2019, one of Pritzker’s first successes was doubling the gas tax to 38 cents per gallon. That legislation also increased about 20 other fees and taxes and included a mandatory increase in Part A every July 1st by the rate of inflation. Under the Joe Biden regime, which has given us the highest inflation in 40 years, that means the Part A gas tax is up 24% in Illinois in 5 years. It’s up 147% since 2018, when the Part A gas tax was 19 cents.
The gas tax was sold as a way to fund infrastructure improvements. Taxpayers were told that without the tax increases, Illinois would be unable to fix its crumbling roads and bridges. Reasonable people can agree that a modest increase in gas taxes may have been necessary, but no reasonable person should have trusted Illinois politicians to spend that “infrastructure” money wisely.
For example, according to this Illinois Housing Development Authority report, the 2019 capital bill – funded by debt and taxes – was used to bail out student loans of first-time home buyers. I have had legislators try to tell me that the gas tax increase wasn’t used for this program because, by our constitution, transportation fees and taxes are segregated and only to be used for transportation. But money is fungible, and segregating gas tax money for roads just frees up other “capital and infrastructure” money for all sorts of capital programs that aren’t capital or infrastructure.