Representative André M. Thapedi, D-Chicago, introduced a transportation modernization program backed by the Illinois Chamber of Commerce, to raise $2 billion in annual revenue offset with pro-consumer and pro-business reforms.
House Bill 3823 phases out the state sales tax on motor fuel, so consumers will realize a combined 15 cent per gallon Motor Fuels Tax increase. The sales tax swap eliminates a state tax on motor fuel, narrows the price gap between Illinois and neighboring states, and will create consumer savings when gas rises above $2 per gallon.
“We do not take tax increases lightly,” said Illinois Chamber of Commerce President and CEO Todd Maisch. "That is why the Illinois Chamber drafted, introduced and lead a coalition to support the 'lock box amendment' that passed with overwhelming support in 2016, guaranteeing that funds raised for transportation would be spent on transportation."
The legislation directs the Secretary of State to determine a schedule of registration fees based on the year of the vehicle. The provision aims to ensure drivers with older vehicles, who may drive fewer miles, get less miles per gallon, or are less able to afford registration fees, will see a decrease in their registration costs. Many other states have tiered registration fees, including Iowa, Missouri, and Michigan. Besides potentially lowering fees for those who are not as able to afford them, HB 3823 includes $2 million in funding for building trades training programs for disadvantaged populations.
To prevent the Motor Fuel Tax increase from hurting the trucking industry, the Chamber’s proposal eliminates the Commercial Distribution Fee to make Illinois more competitive with surrounding states.