As a Chicagoan I often wonder why when the national average gasoline prices are reported they are often so much lower than the Chicago average. Even prices in neighboring states seem to be cheaper? So why the elevated prices for Chicago?
Well, you may have guessed the main culprit: taxes. Huge arrays of tax levies are stacked on top of gas’s retail price. The federal excise tax on gasoline is 18.4 cents per gallon; the IL excise tax is 19 cents plus 0.3 cents for underground storage tank fund and 0.8 cents for an environmental impact fee. But all that’s not even the half of it!
Illinois is one of only seven other states that charge sales tax on gasoline. Gas prices in most state are assessed at a fixed number of cents per gallon. Meaning no matter how crazily oil prices rise, consumers pay the same built-in tax in those states. This is not the case in Illinois however and when gas prices rise for all of America, they rise even faster in Illinois. Normally sales tax in Illinois is at 6.25% however if the gas is mixed with ethanol, which all of it is, gas is taxes at 5%. But Illinois goes even a step further, allowing counties and municipalities to tax gasoline. City, country and regional transportation authority sales tax add another 2.8% after the ethanol discount.
We’re not done yet; there’s more.
Chicagoans also pay a flat tax levied by the city of Chicago and Cook County of 5 cents and 6 cents, respectively, IL being the only state in the union to allow all these different taxes to be levied in unison. Plus consumers pay tax on tax because the sales taxes are added on top of flat taxes, increasing the total cost for gasoline. Have you been doing your math? That’s a whopping 69 cents added to every single gallon of gas. And for a two-car family that means spending an average of $700 more every year compared to the national average.