Illinois senators bid to end state’s fuel sales tax

| 5/22/2007

In an effort to fend off record-breaking fuel costs, a bill in the Illinois Senate includes a provision that would end the collection of a sales tax on motor fuels sold in the state.

Consumers in Illinois now pay a 6.25 percent sales tax on motor fuels pumped into their tanks; 5 percent of that goes to the state with the rest earmarked for local governments. A bill that deals with property tax codes has been amended to include a provision that calls for the state portion of the tax to be eliminated starting July 1.

Supporters said because fuel prices are soaring, the state’s revenue from that sales tax is significantly higher than had been expected.

Sen. Chris Lauzen, R-Aurora, said the state is raking in about $650 million annually on its fuel tax, the Beacon News reported. Referring to the profits as a “windfall,” Lauzen said the money should be going back to the public.

Opponents said even a temporary suspension of that tax would cause hardship in other areas of the budget, such as education and health care.

The last time Illinois tweaked the amount of sales tax collected from motor fuels was nearly seven years ago. Then-Gov. George Ryan suspended the tax from July 1 to Dec. 31, 2000. At the time, fuel prices had spiked to more than $2 in the Chicago area.

As of Tuesday, May 22, the average price for a gallon of diesel in Illinois is $2.974. The average price for a gallon of gas is $3.481.

The Illinois Senate must sign off on changes to the bill – HB576 – before it can head back to the House for final approval. An agreement would need to be reached before the session’s scheduled adjournment June 1.

– By Keith Goble, state legislative editor