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During a recent podcast interview, Illinois Comptroller Susana Mendoza defended the doubling of the state excise tax on gasoline by arguing, in part, consumers in Indiana still pay more taxes on gas than in Illinois.
Her claim came just after the Illinois tax doubled to 38 cents per gallon, part of Gov. J.B. Pritzker’s $45 billion infrastructure improvement plan. The revenue generated by the tax hike is earmarked for road and bridge repairs throughout the state.
After the new tax went into effect, news reports stated some residents were crossing state lines to save a few dollars by filling up their tanks in Indiana. Two weeks ago, Chicago Sun-Times podcast host Ben Joravsky asked Mendoza, a Democrat and steadfast supporter of many Pritzker initiatives, about this new phenomenon. Mendoza didn’t vote on the tax hike but voiced her support for it.
"Indiana actually has a higher gas tax than Illinois does even with the increase in taxes," Mendoza said in response. "We used to only pay 19 cents a gallon for taxes here in Illinois on the gas tax, whereas Indiana has been paying 43 cents a gallon for their gas tax. So ours, even at 38 cents, is still less than what Indiana pays today."
Either driving to Indiana for gasoline is a futile and expensive endeavor, or Mendoza performed a feat of statistical gymnastics to defend a controversial tax increase she endorsed. So, we decided to check out the numbers.
According to the Illinois Department of Revenue, the Illinois motor fuel tax rate is set at 38 cents per gallon from July 1, 2019 to June 30, 2020. That rate rose from 19 cents per gallon, which had been the state excise tax on gasoline since 1990.
Indiana’s excise tax on gasoline is 30 cents per gallon, after a penny increase went into effect July 1.
According to Mendoza’s spokesman, Abdon Pallasch, the comptroller was given figures he had gathered from outdated articles that shared the results of a 2018 report published by the American Petroleum Institute (API), which compiled all motor fuel taxes and fees by state, rather than just the excise taxes.
Based on those findings, state taxes and fees on gasoline in Indiana totaled 42.9 cents per gallon compared to 37.32 cents per gallon here in Illinois in July 2018. However, the API’s updated numbers for 2019 list the total Illinois gas taxes and fees at 54.98 cents per gallon and the Indiana total at 46.62 cents per gallon.
By that measure, gasoline is clearly taxed at higher levels in Illinois.
Pallasch acknowledged Mendoza’s office mistakenly used the 37.32 cents per gallon statistic for Illinois even though it represented an outdated number from last year. That led to a faulty analysis in which Mendoza compared the new Illinois excise gasoline tax to an old figure for the overall amount of taxes and fees on gasoline in Indiana.
"After the (Ben Joravsky) Show, I went back and looked at the numbers and realized that it was an inexact comparison," Pallasch said. "She used an apples-to-oranges comparison."
Those overall tax and fee totals detailed by the API consist of a few different components in each state. For Indiana, the 46.62 cents per gallon charge includes the state’s excise tax on gas, a gasoline-use tax calculated monthly according to the average price of a gallon of gas (15.6 cents per gallon for July 2019), and a 1 cent per gallon oil inspection fee. In Illinois, the total number adds a state sales tax of about 15 cents per gallon and nominal fees for underground storage and environmental impacts to the new excise tax of 38 cents.
What’s more, many cities and counties around Illinois also levy their own additional sales taxes on gasoline. For example, Chicago residents have to pay both the Cook County sales tax of 1.75% and the city sales tax of 1.25%, which are both on top of the state sales tax rate of 6.25%. Ultimately, state and local taxes on gasoline add up to over 60 cents per gallon in Chicago. On the other hand, according to the Indiana Department of Revenue and other state finance experts, there are no direct local taxes on gasoline anywhere in Indiana. That leaves the total taxes and fees on gas at about 46 cents per gallon throughout the state, at least several cents per gallon lower than any Illinois locality.
Illinois residents are also simply paying more for gasoline than people in Indiana. At a Mobil station in Calumet City, a gallon currently costs $3.45. Just two miles down the road in Hammond, Ind., the price of gasoline is $2.99 per gallon.
Mendoza was comparing two different statistical categories. Her number for Illinois only accounted for the state excise tax on gas, while her number for Indiana included all state gas taxes and fees.
"When you use (the 43 cents per gallon) number, you’re including the state’s sales tax on gasoline, and if you want to do that for Indiana, you also have to do that for Illinois, and that bumps Illinois’ tax, when you include that part of the tax, up closer to 55 cents," said Richard Auxier, Urban-Brookings Tax Policy Center research associate. "If you’re doing the comparison accurately, Illinois’ rate is higher."
Mendoza said Indiana has a higher gas tax than Illinois does, even after a recent hike.
By every government measure we checked, and by acknowledgement from Mendoza’s office itself, the claim is wrong.
Illinois residents pay eight cents more in state excise taxes for each gallon of gasoline than residents of Indiana, according to revenue officials in both states. We rate Mendoza’s claim False.
FALSE — The statement is not accurate.
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"BONUS! Monday July 8: With Comptroller Susana Mendoza," The Ben Joravsky Show, July 8, 2019
"Illinois residents cross state lines to fill their tanks after gas tax increase," Chicago Sun-Times, July 1, 2019
"Comptroller Mendoza: Illinois must ‘remain grounded’ amid big budget steps," The Southern Illinoisan, June 11, 2019
"Motor Fuel Tax Rates and Fees," Illinois Department of Revenue, July 2019
"Illinois Gas Tax Increase: What You Need to Know," NBC Chicago, June 28, 2019
News Release: State and Federal Excise Taxes Levied on Motor Fuel, Indiana Department of Revenue, July 1, 2019
Phone interview: Abdon Pallasch, director of communications for Susana Mendoza, July 16, 2019
"How much gas tax adds to cost of filling up your car in every state," USA Today, Feb. 5, 2019
"State Gasoline Tax Rates as of July 2018," the Tax Foundation, Aug. 8, 2018
Report: State Motor Fuel Taxes: Notes Summary, American Petroleum Institute, July 1, 2019
News Release: Gasoline Use Tax Rate, Indiana Department of Revenue, July 2019
"Prepaid Sales Tax Rates," Illinois Department of Revenue, July 2019
Report: Sales Tax Rates in Home Rule Units of Local Government, Illinois Department of Revenue, January 2018
Phone interview: Sam Salustro, public information officer for the Illinois Department of Revenue, July 15, 2019
Email interview: Emily Boesen, chief communications officer for the Indiana Department of Revenue, July 16, 2019
Email interview: Michael J. Hicks, professor of economics and business research at Ball State University, July 15, 2019
Phone interview: Richard Auxier, research associate at the Urban-Brookings Tax Policy Center, July 15, 2019
Phone interview: Mobil gas station in Calumet City, Illinois, July 17, 2019
Phone interview: Marathon Gas station in Hammond, Indiana, July 17, 2019
Phone interview: Christopher Z. Mooney, professor of state politics at the University of Illinois at Chicago, July 17, 2019
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