Illinois Bill would drop state tax on gas

greenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

Bill would drop state tax on gas

Journal staff and wire reports

SPRINGFIELD - Gas prices could drop in Illinois if a bill passed Wednesday by the State Senate becomes law.

Even Congress is feeling the pinch of soaring gasoline costs. With prices projected to possibly hit $2 a gallon this summer, a growing number of lawmakers are suggesting a temporary cut in the 4.3 cent federal gasoline excise tax imposed in 1993.

The Illinois Senate voted 50-0 Wednesday, with six voting "present," to remove the 5.5 percent state sales tax on gasoline. The action has no effect on the 19-cent per gallon motor fuel tax.

Supporters say that move will cut the cost of a gallon of gas by about 9 cents. The $240 million plan now goes to the House.

Illinois is one of the few states that collects both a sales tax on gasoline and a separate motor fuel tax. Neighboring Indiana is considering action on its motor fuel tax since it is a percentage of price and increases as the gas price rises.

Advocates of the bill say that it will benefit consumers and help Illinois service stations better compete with those in neighboring states. But opponents of the bill say it is not the best way to give tax relief to Illinois residents.

"Illinois has the highest taxes on fuel in the Midwest. People in border communities are crossing state lines to buy gasoline. It's a real problem. By eliminating this tax, people will buy more gasoline in the state," said Bill Fleischli, executive vice president of the Illinois Petroleum Marketers Association.

Gasoline sells for about a nickel more a gallon in Illinois than in Iowa, said Frank Low, general manager of Quint Cities Petroleum Co. in Moline.

But Mike Klemens, a spokesman for the Illinois Department of Revenue, said the state stands to lose $335 million in potential revenue each year if the five percent sales tax is eliminated. That estimate is based on gasoline selling for $1.29 a gallon.

"We see no reason, given the other necessities of life that are taxed in Illinois, why we should not tax gasoline," he said.

"Consumers are being hit hard by the high price of gas," responds Sen. John Maitland, R-Bloomington. He notes those hardest hit are "people on fixed incomes, senior citizens, the farm community and businesses that require a lot of driving by their employees. This, in turn, is driving up other prices," Maitland said.

"This bill is a sham," said Senate Minority Leader Emil Jones, D-Chicago. "The retailers are not going to pass this on to (consumers)."

But the real question is how it will fare when Gov. George Ryan and legislative leaders sit down to negotiate the outlines of a $46.5 billion budget.

"It has been discussed," said Senate President James "Pate" Philip, R-Wood Dale. "We haven't come to any conclusions, quite frankly. Hopefully, we will in the next week or 10 days."

The governor has not taken a position on removing the gasoline sales tax.

Advocates of the measure say that the volume of fuel sold will go up because of lower taxes.

"Many truckers are not fueling up in Illinois because of the cost of fuel. Instead, they are fueling up on the border in places like Walcott, (Iowa.) and driving across the state," Low said.

State Sen. Denny Jacobs, D-East Moline, voted for the tax cut.

"This helps working-class people a lot," he said. "Right now, people are spending too much for gasoline. People are driving to Iowa, Wisconsin and Missouri to fill up. That's just not right."

The tax cut would drop the cost of a gallon of gasoline about nine cents, proponents of the legislation say.

But Klemens said it might result in gasoline retailers increasing their profit margins without passing on savings to consumers.

The House of Representatives will now consider the measure. House Speaker Mike Madigan said Wednesday he is keeping an open mind on whether to support the tax cut.

The measure received broad- based, bipartisan support in the Senate.

"This tax is a very regressive tax that hits our seniors, our low-income residents and our residents on fixed incomes the hardest," said Sen. Frank Watson, R-Greenville.

Watson acknowledged there is nothing in the bill to guarantee the savings will be passed on to motorists.

The bill stipulates, however, that the number of gallons of gasoline sold in Illinois must increase 15 percent in three years or the tax will be reinstated. Watson said that will force gasoline dealers to keep their prices low.

Despite growing support in Congress, the idea of a cut in the federal gasoline excise tax so far is getting a cool reception from the very lawmakers who write the tax laws.

Such a tax cut, even if temporary, also would take billions of dollars away from the federal trust fund for highway construction, something that does not set well with lawmakers planning the transportation budget, nor the powerful highway lobby.

http://www.daily-journal.com/news/stories/n03090001.html

-- Martin Thompson (mthom1927@aol.com), March 19, 2000


Moderation questions? read the FAQ