High taxes, bad policy: The anatomy of Illinois’ record-high gas taxes on Memorial Day – Wirepoints

By: Ted Dabrowski and John Klingner

Like it is on so many other fiscal issues, Illinois is an extreme outlier nationally when it comes to gas taxes. Gas prices hit a record $5 on Memorial Day and Illinoisans ended up paying the country’s second-highest gas taxes because of the many layers of taxes that are tacked on by multiple governments. Everyone wants their take, and that includes the state and Gov. J.B. Pritzker. His policies are directly and indirectly responsible for a large portion of the burden Illinoisans now face. 

Below we break down the different levels of gas taxes Illinoisans pay – most residents are simply unaware of the layering that goes on – and then we look at Gov. Pritzker’s role in Illinois’ higher gas prices.

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Take gas taxes in Naperville as a good example. There you’ll see the fed’s take, two different types of state taxes, another tax for DuPage County and finally a local city tax. 

Combined, it’s nearly a 25 percent tax.

First, there’s the flat federal motor fuel tax of 18.4 cents per gallon that hasn’t changed since 1993. Everyone in the country pays the same amount.

Illinois then applies its own 39.2 cent motor fuel tax, which was doubled from 19 cents by Gov. Pritzker in 2019 when he and the legislature passed Illinois’ $45 billion capital bill. As part of that law, the motor fuel tax now goes up automatically each year based on inflation. The state also applies another 1.1 cents in other environmental fees. 

On top of that, Illinois imposes a 6.25 percent sales tax on every gallon of gas, one of just ten states to do so. The 6.25 percent tax is applied not only to the base cost of gasoline, but also to the federal 18.4 cent motor fuel tax. Yes, Illinoisans pay taxes on the federal taxes they pay.

State law also authorizes local Illinois governments to apply their own gas taxes, creating a patchwork of higher and lower taxes across the state. 

Filling up in Naperville will hit you with a city motor fuel tax of 4 cents and a county motor fuel tax of 8 cents. 

Add it all up and Naperville residents end up paying 98 cents in taxes for every gallon of gas.

The problem of sales taxes

While the state’s motor fuel tax is at the top of everyone’s mind – Pritzker has said he’ll delay a 2 to 3 cent motor fuel tax hike in July – it’s Illinois’ 6.25 percent sales tax that deserves a closer look. It’s the far more insidious tax due to the current spike in gasoline prices. As gas prices go up, so, too, do the sales gas taxes Illinoisans pay.

The current state sales tax on a gallon of gasoline has jumped to about 27 cents on average as gas prices in Illinois have reached record levels. The sales tax has jumped by 9 cents alone since the beginning of 2022 and by nearly 14 cents since Gov. Pritzker took office.

If gas prices continue to rise as some predict, the sales taxes on gasoline will continue to go up automatically. At $6 a gallon, the sales tax on a gallon of gas will be on average about 33 cents, another 6 cents higher than today. Illinoisans will be hit not just by higher gas prices, but higher gas taxes, too. 

Who’s to blame

There are many reasons for the higher gas prices Illinoisans are now saddled with, and Gov. Pritzker’s policies make up a number of them. His policies have hiked up gas taxes in this state and he’s been a supporter and influencer of national policies that have pushed up prices in general.

Pritzker’s single biggest direct contribution to pain at the gas pump was his doubling of the motor fuel tax as part of the state’s 2019 capital bill. That bill also added an inflation provision that raises the tax every year.

When Pritzker took office, the total state-level (excluding federal) gas taxes per gallon were around 32 cents, the nation’s 21st-highest. Today, under his leadership, it’s grown to about 68 cents. So state gas taxes have increased more than 110 percent since he took office.

Pritzker was also a big proponent of the federal bailouts, claiming several times throughout the pandemic that the state desperately needed billions in funds. Pritzker was such a supporter that President Biden chose Illinois as a location to push for his doomed “Build Back Better” spending smorgasbord. The near-$200 billion stimulus cash Illinois received, part of the overall $10 trillion the feds spent, directly fueled the nation’s current sky-high inflation. 

And Pritzker is one of the nation’s biggest supporters of the “green” energy movement – he made a special trip to the 2021 United Nations Climate Change Conference to tout Illinois’ “leadership role by establishing a nation leading climate action plan,” and that Illinois was “leading the Midwest on climate action and building a green energy economy.”

His evidence: the bill that Pritzker championed last year, “the most aggressive, most progressive climate bill in the nation” that forces Illinois to have 50% of its electricity production from renewable sources by 2040 and 100% from clean energy sources by 2050.

“Green” policy choices like that have made the nation less energy independent, leading to higher gasoline prices for consumers.

All of Pritzker’s policy choices above makes his promised tax “relief” – really a delay in one of his latest gas tax hikes – pitiful in the face of gas prices rising by whole dollars.

Real relief for Illinoisans has to come in the form of permanent cuts, either to the sales tax or the motor fuel tax – or both. And they need a governor who won’t support failed national policies that push gas prices ever higher.

Appendix.

The numbers below are from January 2022 when gasoline prices were around $3.50 a gallon. As of May 30, 2022, Illinois gas prices are about $5.00 per gallon, which means Illinois’ state/federal gas taxes are now approximately 86 cents per gallon.