Keicher, Syverson propose sales tax cap on gasoline as prices surge in Illinois

State Republican lawmakers Rep. Jeff Keicher and Sen. Dave Syverson are calling on Springfield to cap the statewide sales tax on motor fuel at 18-cents per gallon to provide relief for Illinoisans at the gas pump amid soaring prices and inflation.

Keicher, R-Sycamore, and Syverson, R-Cherry Valley – who both are running for reelection in newly redrawn legislative districts – co-wrote an op-ed. In it, they called for Gov. JB Pritzker’s administration and the General Assembly to act swiftly to combat additional increases in gas prices.

Fuel in Illinois has jumped higher than $4 per gallon and is projected to top $5. The Springfield lawmakers said they have a plan to bring Illinoisans less pain at the pump.

[ Less pain at the pump? Maybe a little. Here's how the market works ]

“Gas prices are devastating to families who drive miles each day going to work, taking kids to school and running errands,” Keicher and Syverson said in a joint editorial sent to news media March 17. “Most of the blame for these high gas prices falls on Washington, but there are ways the state can help. We can provide relief at the pump now, as well as prevent any future sales tax increase.”

Academics who study the global oil market and an advocate for motorists said oil prices are in retreat, and that could means less pain at the pump in the weeks ahead.

Big relief, however, is not in the short-term forecast. Rick Pretzsch, an economics professor at Illinois Valley Community, said he doesn’t see prices tumbling into the $3 territory until turmoil across the globe – not just in Ukraine – lessens.

“If they were to reach a peace agreement, oil prices will fall, there is no doubt about that,” Pretzsch said. “Now, they will not fall as fast as they rose, but we will see oil prices fall because there will be more confidence in the market.”

Prices won’t fall substantially because commodities as a whole, not just crude oil, are subject to what economists call “sticky prices.” For example, when the price of beef rises, fast-food companies will raise the price of hamburgers – but they’ll be decidedly slower in bringing them down. That applies to gas, too.

“We do see prices rise very rapidly, and a lot of this has to do with speculation and fear,” Pretzsch said. “But when oil falls, gas prices fall slowly and there is no real concrete reason why.”

Illinois is among the nation’s 10 most expensive gas markets. On March 9, Illinois ranked seventh highest in the nation for regular fuel at an average of $4.52 a gallon.

Keicher and Syverson said they’re advocating for state sales tax to change through Senate Bill 4195. It wouldn’t change the fixed motor fuel tax rate, which is a flat rate unchanged by fluctuating gas prices. The pair is instead advocating for lawmakers to cap the sales tax on gasoline in Illinois, so it won’t continue to rise relative to the jump in prices at the pump.

“We are not changing the [motor fuel tax] tax or impacting needed road work,” Keicher and Syverson said in a joint op-ed. “However, the state sales tax is a percentage tax and increases as the price of fuel goes up, and those dollars go back to government coffers and do nothing to improve our roads and bridges.”

Illinois is among a handful of states that charge both motor fuel tax and sales tax on gas at the state and local level. Revenue from the taxes is meant to go toward statewide road improvement and bridge projects.

Under the Pritzker administration, dubbed Rebuild Illinois, $20.7 billion dollars has been allocated for six years worth of projects across the state.

In DeKalb County, millions of Rebuild Illinois dollars have been allocated for bridge projects, a transportation hub for DeKalb city transit and Northern Illinois University buses, and road and highway improvement projects. The city of DeKalb wants to use $17 million to build a new transit facility to house DeKalb city and Northern Illinois University public buses. DeKalb County government plans to use $1 million to improve the Voluntary Action Center’s facility, which offers paratransit services throughout rural DeKalb County and facilities the county’s Meals on Wheels program. A year ago, Pritzker visited Waterman to announce a $1.9 million final phase of a reconstruction plan for a 5-mile portion of Waterman Road, from downtown Waterman to Perry Road.

In McHenry County, $21 million in Rebuild Illinois funds went in 2021 to several spring projects, including construction of a new roundabout at Grant Highway, the bridge over Kishwaukee River along Route 47, and intersection improvements of Route 176 at Nish Road. In Kane and Kendall counties, spring construction is planned for several miles of bicycle trails, including resurfacing along the Fox River Trail downtown Elgin, and bike lane construction and work in Algonquin, Geneva and Aurora.

“Rolling back this state sales tax on gas will help families keep more of their own money, while the flat-rate [motor fuel tax] will continue to improve our roadways,” Keicher and Syverson said in a joint statement. “We must pass emergency relief legislation before session adjourns this spring.”