Doubled gas tax creates losers in Illinois, winners across state lines

Station owners said Illinois businesses were damaged July 1 when the gasoline tax doubled. Tax increases are keeping Illinois pumps quiet and cooling cigarette sales.

There are Moto Mart gas stations just across the Illinois state line on Interstate 270 in Missouri and Interstate 64 in Indiana. Both have been very busy since July 1, when Illinois doubled the state gasoline tax from 19 cents to 38 cents per gallon.

“Fuel sales in both locations [are] way up,” said Robert Forsyth, president of Moto Inc., which is based in Belleville, Illinois, and operates 79 Moto Mart gas and convenience stores in six Midwest states.

Sam Dharni doesn’t have an out-of-state location. Dharni’s Gas and Food in Antioch, Illinois, has competition 100 yards away in Salem Lakes, Wisconsin.

“[Wisconsin] is like 30 cents cheaper, at least … whatever my cost is, their cost is 30 cents lower. If I’m working on no margin, they’re still making 30 cents more,” Dharni said.

Both Forsyth and Dharni said when they don’t sell gas, they don’t sell cigarettes or anything else their convenience stores offer. Dharni said his gas sales were down 40-50%, but the total July hit was $7,000 to $8,000 in lost sales.

“[Revenue loss] has affected us. Overall as a business, we can’t spend money on any infrastructure; can’t make any improvements so we have to go with the bare minimum,” Dharni said.

Forsyth’s Moto Marts in Illinois are also losing convenience store sales.

“Remember, cigarette taxes were already $2-a-pack more in Illinois than Missouri, and a large part of our sales are cigarettes,” Forsyth said. “Those just went up another $1, so there’s a $3-a-pack difference now.”

He said Gov. J.B. Pritzker and state lawmakers demonstrated a disdain for areas of the state that can’t stomach further increases in the cost of doing business, first with the $15-an-hour minimum wage hike and then with the gas tax and litany of other tax and fee hikes.

“Pritzker put a dagger in the heart of the Southern Illinois economy,” Forsyth said.

He did no favors for any border areas, with Dharni worried about his ability to stay in business. He, too, said the minimum wage increase plus the automatic annual gas tax increase is creating a bleak future.

“We will have to see but there will be a lot of bankruptcies, mostly in the gas business. Across all the towns near the borders. There will be a lot of business closures,” Dharni said.

Existing businesses are getting hurt, but Forsyth said Illinois also suffers because no outsider wants to invest in a state so hostile to business. He said Pritzker must understand but appears not to care.

“It’s politically expedient to say you care, but when you pass regressive taxes like this it shows you do not really care about the rest of the state or your poor,” Forsyth said.

He said the new taxes disproportionately hit those least able to afford them. Low-income Illinoisans tend to drive older, gas-hungry vehicles and have little option but to pay more of their limited income to get where they and their children must go. Cigarette taxes hit them hard, too.

The gas tax is expected to cost each driver an additional $100 a year. Illinoisans now pay the third-highest gas tax burden in the nation, and the ranking could go higher because the new law granted greater gasoline taxing authority to the state’s most-populous counties.

Illinois leaders have things backwards, Dharni said.

“They should actually fix their problems first and then start asking for people’s money. Why are the taxes doubling but [Illinois is] still struggling? Where is the money spent?”

Dharni said the state should bring down the gas tax and find policies to help local business owners.

“They should be more competitive with other states on all taxes, not just the gas tax. They should spend based on the revenue. And then they should fix their internal problems – where the money is being spent – instead of robbing people.”