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Watson Supports Fuel Tax Suspension Bill

Jacksonville, IL…State Representative Jim Watson (R-Jacksonville) is supporting a House Bill filed this week that would eliminate the 5% state portion of the sales tax on motor fuel for the 2006 summer driving season.  HB5785 would suspend the fuel tax from May 15^th to September 15^th. 

“This is a payback to Illinois motorists” said Watson.  “High motor fuel prices during the first four months of this year have created unexpected surplus revenue for Illinois in the form of excess sale taxes already paid to the state by motor fuel consumers.  This suspension will not create a new burden on the State, nor will it put money back into the pockets of the refineries and manufacturers like the Democrat leadership says it will.  Rather it will pay back the surplus to the hard-pressed Illinois consumers.”

Watson said that almost a month before the summer travel season; Illinois gasoline prices are nearly $0.75 per gallon higher than prices one year ago.  On Friday, April 21, 2006, crude oil hit an all-time trading high of $75.35 a barrel at the New York Mercantile Exchange.

“Illinois consumers, especially those on fixed incomes, struggle to maintain their budgets in the wake of high gas prices” said Watson.  “AAA reports that a typical household uses 17 gallons of fuel a week, which costs $50 a week at today’s prices.  At the same time, Illinois truckers driving 2,500 miles a week are spending over $1,300 with today’s average diesel price of $2.99.”

In FY 2005 the State collected over $614 million from the sales tax on motor fuel.  The Commission on Government Forecasting and Accountability (CGFA) projected that in FY06 the State could collect $175 million more than last year because of the increase in prices (based on a price of $2.72 a gallon.

 “A gas tax suspension has worked once before” Watson said.  “In the summer of 2000, high fuel prices prompted Illinois to suspend the 5% State portion of the sales tax applied to motor fuel for six months.  According to the CGFA, that suspension saved Illinois motorists $157 million.”

The State sales tax rate is a percentage, and therefore, the dollar amount collected on an item increases as the cost of the item increases.  On a $3 gallon of gasoline, Illinois collects about 16¢ in state sales tax.  Sales tax revenues go towards general government expenses.

HB5785 was filed on Wednesday and immediately referred to the Rules Committee.  Gov. Rod Blagojevich has opposed suspending the state sales tax on gasoline, saying state government needs the money it generates.

Watson said it comes down to a simple philosophy.  “Who needs the money more?  The hard working taxpayer who is paying exorbitant prices at the gas pump, or the State of Illinois?  Opponents to the measure believe state government needs the money more than the people.  This is something the state can afford to do.  By paying back this surplus, Illinois will keep faith with its consumers who are paying more money than they had budgeted for motor fuel.”

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