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Eye On Illinois: Soybeans, gray area and consumers feeling the squeeze of a tax on leased equipment

A few quick hits from the mailbag…

From GW in Dixon: “You write an article about economic woes for (Illinois’) farmers, and you don’t even mention the Trump tariffs? Really? I know the Chinese refusal to buy soybeans has really hurt farmers.

From AO, regarding immigration (but broadly applicable): “With all laws, take speed limits for example, there is always some gray area and discretion allowed to deal with imperfections in the law, special circumstances, and practical problems. However, ignoring the law leads to civic breakdown. The grandstanding by both sides needs to be replaced by well-crafted laws and dispassionate enforcement.”

Then we have a brief note that warrants deeper attention. In late September, I wrote about the potential for energy legislation to take top billing at the veto session that begins this week. GJ from Lake In The Hills wrote to explore the status of Senate Bill 1633, which would stipulate that homeowners who lease solar energy systems would be exempt from taxes under the Use, Service Use, Service Occupation and Retailers’ Occupation tax acts.

Under the current system, GJ is now paying an extra $6 monthly “for putting solar on my house. Seems we are being punished for going green.”

Last week I spoke with the bill’s sponsor, Sen. Don DeWitte, R-St. Charles, who explained the history of a shift to putting the sales tax onus for lease transactions on the end user rather than preceding business-to-business transactions.

The impetus, per DeWitte, involved a Streamwood company that purchased large medical equipment and leased it to hospital customers. That firm ultimately moved to Wisconsin to lessen the expense of the initial transactions, and the Illinois Chamber of Commerce supported a change to what it considered a detrimental, aggressive tax policy.

DeWitte said the Department of Revenue also was on board because of the enhanced revenue that can be realized when the same piece of equipment is leased to multiple users. The downside, from a consumer standpoint, is the potential to charge sales tax on any leasing agreement. In addition to solar panels or cable boxes – semi-permanent home goods – the tax could apply to things legally “leased” that most consumers feel are short-term rentals, like golf carts and bowling shoes.

SB 1633 specifically exempts solar panels. Although it has three Democratic co-sponsors, it’s idled in the Assignments Committee since June. DeWitte suggested a more palatable fix is a broader-based exemption based on the dollar value of transactions. That might salvage the bulk of a new revenue stream while providing consumer-level relief.

If the veto session conversation involves sales tax reform, this issue absolutely must be incorporated. Modernizing the tax structure is overdue, including for the opportunity to resolve unintended consequences.

• Scott T. Holland writes about state government issues for Shaw Local News Network. He can be reached at sholland@shawmedia.com.

Scott Holland

Scott T. Holland

Scott T. Holland writes about state government issues for Shaw Media Illinois. Follow him on Twitter at @sth749. He can be reached at sholland@shawmedia.com.