Opinion: High fuel taxes worsen families' inflation pain

Gary Meyer runs Friendly Fred’s Truck Stop in Gilman, roughly 20 miles from Indiana. As fuel prices and taxes rise, business owners such as Meyer are especially feeling the effects.

“As a gas station and truck stop owner, we make money on inside store sales and if we’re lucky, 3 cents per gallon for selling gasoline. In a competitive market, owners may be losing a few pennies a gallon to win customers,” Meyer said.

No matter how hard Meyer and other bordering business owners try to compete, Illinois’ high fuel taxes are driving customers across state lines.

“The difference between gasoline prices in Illinois and the bordering states is significant: 60 cents to 70 cents a gallon higher in Illinois. So, if you’re close to the border, why would you buy gasoline in Illinois?” he said.

On June 10, average gas prices in the state broke records for the 12th consecutive day. Illinoisans living on the border could see anywhere up to a $0.98 cent difference per gallon on average in neighboring states.

Meyer’s customers, for example, could save $0.23 cents per gallon on average simply by driving to Indiana for gas, hurting his business and making it harder to compete across state lines. High and rising fuel taxes are partly to blame.

In 2019, Gov. J.B. Pritzker’s budget added 24 new taxes and fees, including a doubling of gas and diesel taxes and the addition of inflation-based automatic increases. Gasoline taxes went to $0.38 from $0.19, and diesel taxes jumped to $0.46 from $0.22.

This drove Illinois gas prices to No. 2 in the nation from 10th just two years prior. While tax hikes may not receive as much pushback when the economy is in good shape, they make bad times especially painful for families.

Consumer prices rose 8.6% in the month of May, further squeezing Illinois families in an already difficult time. Gasoline is up 49% in the past year, energy services have risen by 16%, and grocery bills are up 12% on average.

Each of these areas has been partially impacted by Pritzker’s 2019 tax hikes. Gas taxes hurt families at the pump, while diesel taxes nickel and dime customers at check out.

“When diesel costs are as high as they are, the cost of shipping goes up, and that’s not going to come down easily, if ever. When the cost of shipping goes up, so does the price of everything: clothing, parts, food all go up,” Meyer said. “Diesel is on the lower part of the refining process, so diesel fuel should be cheaper than gasoline.”

However, the reverse is true for diesel in Illinois. Average diesel prices reached $5.64 and gas prices topped $5.56 statewide on June 10, according to AAA. Those extra pennies add up when Illinois families buy everyday items.

Pritzker also doubled the tax on natural gas in 2019 to $0.46 from $0.22, so Illinois families using natural gas in their homes are also feeling the pinch.

“Here’s the point: If Illinois lawmakers lowered the fuel taxes, they would lower the cost of gasoline and diesel. That’s the quickest way to help hurting families in Illinois, business owners, and the economy,” Meyer said.

Illinois’ high tax climate sends border families running for the hills and rightfully so. Without real relief by reversing the doubled fuel taxes and automatic increases, families will continue to feel higher costs for everything, even after other inflationary pressures ease.

Ann Miller is staff writer for the Illinois Policy Institute.