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State Senate woos voters with cut in gas tax

By Christi Parsons and Ryan Keith Tribune Staff Writers March 9, 2000 With gas prices soaring and elections looming, the Illinois Senate voted overwhelmingly Wednesday to repeal the state's sales tax on motor fuel, a move that could save drivers up to 9 cents a gallon at today's prices.

Senators who had been divided on the issue voted without dissent to get rid of the tax in October.

Though some lawmakers complained that there are better ways to provide economic relief to poor people, Senate President James "Pate" Philip (R-Wood Dale) warned them that opposition to the Senate Republican plan would be difficult to defend.

"They might drive junkier cars, but they drive cars," Philip said. "If you're running for re-election and you've got opposition, I've got news for you. You better vote for it."

The proposal comes amid predictions that gasoline prices are likely to keep rising, perhaps above $2 a gallon. Proponents say the price increases improve the proposal's chances of passage.

Conservative estimates predict a repeal would divert about $240 million from state coffers each year, just shy of the $250 million surplus the state expects at the end of the next fiscal year.

House Speaker Michael Madigan (D-Chicago) gave the proposal a lukewarm reception. He reminded Republicans that he wants all tax-cut proposals to be worked out as part of budget negotiations later in the session and that he won't call specific plans for consideration in the lower chamber unless there is an overall agreement.

Gov. George Ryan said he would consider the gas-tax plan and all other tax-cut proposals during budget negotiations, but officials in the Illinois Department of Revenue said they oppose the plan and warned that the savings might not be so dramatic as promised.

With elections on the horizon, both parties in the General Assembly are trying to portray themselves as the taxpayers' best friends. That, coupled with the Senate Republicans making the gas-tax bill a high priority, puts the plan on the table for serious discussion.

"I think the Senate vote puts a lot of pressure on the House," said Don Schaefer, lobbyist for the Mid-West Truckers Association, which supports the bill. "A lot of people voted for it in the Senate today who didn't vote for (a similar proposal) last year. Things are a little different."

Under the Senate plan, the state would stop collecting its sales tax on gasoline, which amounts to about 5 percent of every sale. It would leave in place the state's motor fuel tax, which stands at 19 cents per gallon for gasoline and 21 1/2 cents for diesel.

The proposal would freeze local gas taxes and prohibit local officials from imposing new ones.

But it would leave in place the state's special 1.1 cent levy to raise money for environmental cleanup, and would not affect federal fuel taxes.

Republicans say the tax cut would help not only motorists but also Illinois gas stations near the state's borders, which lose business to neighboring states with lower prices.

Industry officials said the repeal would put Illinois gas prices on par with Wisconsin's and Iowa's and make them only slightly higher than those in Missouri and Indiana.

Though the taxes usually only mean the difference of a dollar or two on a tankful of gas, David Sykuta, executive director of the Illinois Petroleum Council, said industry studies show many motorists are willing to make the trip.

"To save a penny or two a gallon, they might drive 10 miles," Sykuta said. "They might save about as much as they spend on the gas they burn to get there."

Supporters contend that cutting the gas sales tax would provide more money for improving state roads. While the gas sales tax goes to the general revenue fund, the motor fuel tax is dedicated to road improvements.

If the repeal increased fuel sales in Illinois, more money would flow into the road fund, they say.

On average, taxes made up 40 percent of the cost of a gallon of gasoline in Illinois last year, bill proponents said.

"What's brought us here today is the record-breaking prices of gasoline that we're seeing at the pumps today and the projections for increases even greater throughout the year," said sponsoring Sen. Frank Watson (R-Greenville). "Eliminating this tax will mean lower pump prices for consumers."

Watson's plan also calls for reinstating the tax on Jan. 1, 2004, if the elimination doesn't increase the sale of motor fuel by at least 15 percent.

"We're going to force (Illinois gas stations) to be competitive," Watson said.

Although they didn't vote against the plan, Senate Democrats say they think there are other tax-cut proposals that would be more practical.

Senate Democratic Leader Emil Jones (D-Chicago) said there is no guarantee that retailers will pass the savings on to consumers if the tax is repealed.

"This bill is a sham," said Jones, one of six senators to vote "present" on the measure. Fifty senators supported it.

A more practical plan, some Democrats said, is the state Earned Income Tax Credit unveiled Wednesday by the Conference of Women Legislators. The plan would provide low-income workers with a special credit on their state income taxes.

"What we need to do is target tax relief to those who need it most, and that means families," said Sen. Carol Ronen (D-Chicago), who also voted "present" on the gas-tax bill.

State revenue officials oppose the gas-tax plan as well. Department of Revenue spokesman Mike Klemens said it doesn't make sense to drop the sales tax on gasoline and still apply it to virtually every other product sold in Illinois.

Contrary to Senate Republicans' projections, agency officials think the per-gallon savings actually would be between 5 and 8 cents a gallon.

The state expects to collect $23.7 billion for the general revenue fund in the next fiscal year

http://www.chicagotribune.com/news/metro/chicago/article/0,2669,ART-43134,FF.html

-- Martin Thompson (mthom1927@aol.com), March 09, 2000