If most states can do without imposing sales taxes on gasoline, why can’t we?
Motorists in Illinois may not like the level of taxation imposed on gasoline, but there’s no doubt that state officials do.
They produce a gusher of revenue.
The state generated $212 million in gas-tax revenue in April, the highest monthly total for the fiscal year that began July 1, 2022.
Look for that number to go even higher on July 1, 2023, when another automatic gas-tax hike takes effect.
One reason for the high level of taxation is the high cost of gas in Illinois.
AAA reports that Illinois has an average price of $3.94 a gallon as of May. That was the eighth highest in the nation.
Given the volatility in oil prices and the competition among sellers, prices are always bouncing around. Maybe they’ll drop.
One thing is for sure. Illinois’ taxes are higher than many other states.
AAA reports that when Illinois’ gas averaged $3.94 per gallon, the national average was $3.53. That’s a 43-cent differential, and substantially more than Missouri gas prices, which were 73 cents cheaper per gallon.
No wonder Illinois residents who border Missouri routinely drive over to buy gas, cigarettes and, now, marijuana. Those who dispute the idea that tax differentials drive purchasing decisions simply don’t recognize economics in the real world.
It wasn’t so long ago – the election year of 2022 – that the governor threw a couple of crumbs to taxpayers by delaying the automatic gas-tax hike set for July 1, 2022, by six months. It saved motorists a few bucks, for which they were presumably appreciative.
In addition to gas taxes, Illinois is one of the few states that charges sales tax on top. So the higher the price of gas, the higher the sales tax on purchases.
Essentially, there’s no escape for consumers either at the pump or at the ballot box.
Legislators have put themselves beyond the reach of voters by approving passive legislation a few years ago that calls for automatic “cost-of-living” increases in gas taxes. Even if the public realized what’s happening and wanted revenge, our officials have cleverly buffered themselves against that.
Some level of taxation on gasoline, of course, is necessary. It’s important to maintain current roads and highways and build new ones. But there ought to be limits on the types of taxation.
If most states can do without imposing sales taxes on gas, why have them in Illinois? The answer is because legislators can pass them without undue political blowback, and the sales taxes are disguised by other taxes – federal and local.
Few realize what’s really up. In that respect, it’s similar to how the state operates in general.