Illinois’ second-highest gas taxes drive motorists, business across state lines

At the MotoMart store in Sauget, Illinois, drivers are paying $4.30 at the pump, 20 cents more a gallon than the national average thanks to the Prairie State being No. 2 in the nation for gas taxes.

But a quick drive across the Mississippi River to St. Louis, Missouri, and drivers pay $3.85 per gallon – saving $6.75 on every 15-gallon fill up.

Crossing the state line is the difference between paying the nation’s second-highest and second-lowest gas taxes. And for Illinois gas station owners near state lines, it means losing business.

“It’s like a tale of two cities,” said Robert Forsyth, president of MotoMart Inc. “Missouri is doing quite well in terms of fuel demand. And Illinois is doing quite poorly.”

Illinois gasoline taxes still No. 2 in U.S.

When Illinois doubled its gasoline tax in 2019, it went from the nation’s 10th-highest average tax per gallon to No. 2, where it remained in a January 2022 survey.

Forsyth operates 80 MotoMart gas and convenience stores in six Midwestern states, including stations in Illinois, Missouri and Indiana. He said sales at Illinois stations are down amid near record prices, because drivers are more cost conscious and buy less when they fill up.

“It’s not surprising. Illinois charges a percentage sales tax on top of the state fuel tax on every gallon, so when prices go up at the pump, taxes at the pump go up, too,” Forsyth said. “Meanwhile, Missouri and Indiana don’t add a sales tax on fuel. That means drivers save more.”

He said sales in Missouri are climbing as more Illinoisans cross state lines to fill up amid high prices – and save big. This leaves Illinois gas stations at a competitive disadvantage.

“We’ve seen how higher gas pricing impacts sales; demand decreases and driver behaviors change, including where they fill up and what they buy,” Forsyth said. “This year, sales are up in Missouri and down in Illinois. The percentage increase in sales at our stores in Missouri is actually bigger than the decrease in sales at our Illinois locations.”

Forsyth blames Illinois’ nation-leading taxes for driving residents across the border by exacerbating prices on necessary goods, such as fuel. He said taxes on gas are among the most regressive in the state, affecting the most vulnerable residents more than higher-income residents.

“Illinois’ population has the seventh highest state and local tax burden in the nation this year,” Forsyth said, based on a Tax Foundation report from April. “Take an already overburdened population and then tack on the nation’s second-highest gas taxes… and any additional increase is that much more painful. And some feel it worse than others.

“Not only are upper- and middle-class folks much more likely to have more fuel-efficient vehicles than lower-income folks, who end up driving older, gas guzzling cars, but fuel costs are a larger percentage of a low-income family’s budget.”

Illinois drivers have paid the nation’s second-highest gas tax since Gov. J.B. Pritzker doubled the state gas tax from 19 to 38 cents per gallon to fund $45 billion in infrastructure and pork projects. Illinoisans now pay about $1 per gallon at the pump in taxes.

Pritzker’s gasoline tax hikes

Illinois Gov. J.B. Pritzker doubled the state’s gasoline tax in 2019 to 38 cents from 19 cents per gallon, including automatic annual hikes. The election-year package of taxes relief includes a 6-month delay in the automatic hike, but that means there will be two hikes in 2023.

Pritzker proposed in his 2023 Illinois budget temporarily delaying the automatic annual increase he built in when doubling the state gas tax. But that delay means two gas tax hikes in 2023 after the election. Combined, the double hike in 2023 will drive the state gas tax to 45.2 cents a gallon – a 138% increase in the gas tax since Pritzker took office.

The governor then mandated gas stations put signs on their pumps advertising his tax hike delay – or pay $500-a-day fines.

“Petroleum marketers should not be forced into offering free election-year advertising for the governor,” Forsyth said. “I surely hope this matter will be challenged in court.”

The inflationary adjustment is estimated to cost Illinoisans 6 cents more per gallon in taxes by the middle of 2023. Forsyth said that gives Illinoisans six more reason to cross the border when filling up.