Several gas tax increases are on the table in Illinois, but one has the backing of the state chamber of commerce.
H.B. 3823, proposed by Rep. André Thapedi (D), would phase in a motor fuel tax increase from 19 cents a gallon to 44 cents a gallon and would phase in a decrease in the state’s sales tax on purchases of fuel and natural gas from 6.25 percent to 1.25 percent. Both schedules would be complete by July 1, 2024.
The swap would result in a combined 15-cents-per-gallon increase in the motor fuels tax, according to the Illinois Chamber of Commerce, which proposed the plan. The bill would bring in an estimated $2 billion in annual revenue, the chamber wrote in a March 28 press release.
“We do not take tax increases lightly,” chamber President and CEO Todd Maisch said in the release. "That is why the Illinois Chamber drafted, introduced, and [led] a coalition to support the 'lock box amendment' that passed with overwhelming support in 2016, guaranteeing that funds raised for transportation would be spent on transportation."
The lockbox constitutional amendment was designed to prohibit the state legislature for using transportation funds on non-transportation-related projects.
The legislation would also increase registration fees and certificate of title fees by $50 as of July 1, 2019, and would allow registration fees for electric vehicles to be as much as triple the amount for equivalent internal combustion vehicles.
An amendment proposed by House Revenue and Finance Committee Chair Mike Zalewski (D) to a shell bill (H.B. 102) that he prefiled ahead of the legislative session would allow municipalities to raise their motor fuel tax by up to 3 cents a gallon. The amendment was recommended for adoption by the committee on an 8–7 vote March 29.
In the Senate, Transportation Committee Chair Martin Sandoval (D) has proposed an amendment to S.B. 103, a bill he and committee Vice-Chair Ram Villivalam (D) introduced to provide free and reduced public transportation fares to veterans and students. The amended bill would increase the motor fuel excise tax from 19 cents to 38 cents on July 1, 2019, and yearly thereafter would index the tax to the average of the increase in the consumer price index and the annual Illinois personal income.
Gov. J.B. Pritzker (D) has shown an interest in an infrastructure bill, but he has not endorsed any of the proposed fuel tax plans.
The state has not raised the gas tax since 1990. In addition to the 19-cent excise, the state taxes motor fuel with a 6.25 percent statewide sales tax and levies 1.1 cents per gallon for environmental impacts and underground storage tanks. Several localities levy their own gas taxes, including Du Page, Kane, and McHenry counties — which impose an additional 4-cents-per-gallon tax — and Cook County and Chicago, which collect 6 cents and 5 cents per gallon, respectively.
Illinois isn't the only state proposing to increase the gas tax to fund infrastructure. In her fiscal 2020 budget proposal, Michigan Gov. Gretchen Whitmer (D) proposed a 45-cent gas tax increase to fund road improvements. Alabama Gov. Kay Ivey (R) has also proposed a gas tax increase for infrastructure, as have New Mexico Democrats.
At the national level, the U.S. Chamber of Commerce has advocated for an increase in the federal fuel excise tax. In March 6 testimony before the House Ways and Means Committee, chamber President Thomas Donahue called for the federal fuel taxes — 18.4 cents per gallon for gas, 24.4 cents per gallon for diesel — to be increased by 25 cents.