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Tax On Tax On Tax

Those who live, work or own a business in Illinois are well aware of the astronomical amount of taxes paid out on a yearly basis. While some of these taxes are absolutely necessary to provide security, education and infrastructure, others can leave the Illinois tax payer scratching their head as to the actual benefit to society. The bottom line is taxes are necessary to keep this state and country running and providing those essential services often take for granted. The one obligation of the State of Illinois which is a hot topic is infrastructure, specifically how to maintain it and fund said maintenance. This is where the controversial SB3267 has recently come into play.

It should be noted earlier this week, the Senate President who introduced SB3267 said he will not move it forward. However, if you understand Illinois politics at all, you understand no bill is ever truly dead. This particular bill would create the Illinois Road Improvement and Driver Enhancement Act. It will require all owners or lessees of vehicles required to be registered in Illinois to pay a tax for each mile traveled on Illinois roads. This tax would not be imposed on commercial vehicles in Illinois (this will be revisited in a moment). The cost of this tax would be $0.015 per mile traveled.

The bill provides a timeline of when this fee can be raised, stating the legislature will adjust the fee on June 1st of every fifth year beginning June 1st, 2022. Illinois drivers would have three options as to how the mileage fee is monitored and calculated. The first is the option would be what is called the I-RIDE Smart Plan. This plan would report the miles traveled on public, non-tolled Illinois roads using personally identifiable information and location data to calculate the miles traveled monthly. The best guess is this would require a device to be placed in vehicles which would monitor every road traveled and how many miles you traveled on each roadway.

The second option would be called The I-RIDE Convenient Plan. This would include the reporting of miles traveled monthly using the vehicle’s odometer reading. This plan doesn’t involve the use of personally identifiable information but would still likely include a monitoring device in the vehicle.

The third option is the I-RIDE Flat Rate Plan. This would be a flat monthly rate based on 30,000 driving miles a year for passenger cars and single unit (non-commercial) trucks. This fee ends up being approximately $450.00.  There is also a provision in the bill which allows an undetermined convenience fee to be collected under this option.

The fees paid would be directed to roadway improvement. The bill was introduced due to less taxes being collected at the fuel pumps as more fuel efficient vehicles are being purchased and driven on roadways. The fuel taxes collected are supposed to be used to fund infrastructure improvement and maintenance, however with more cars consuming less fuel the revenue stream has dissipated. The “silver lining” to this bill is that drivers would receive a break on some fuel taxes paid throughout the year.

The most important part of this bill, and why it’s being covered in this article, is that it would repeal the Commercial Distribution Fee (CDF). This is a fee paid by all vehicles registered in Illinois for over 8,000 lbs. The fee is currently a 14.35% increase to registration fees paid annually. This fee was also supposed to be used “for the use of the public highways, State infrastructure, and State services”. However, the money collected for the CDF is currently dumped into the General Revenue Fund for the state. Who’s to say the same wouldn’t happen with the new mileage tax?

At this point, those in the trucking industry may be torn. On its face, the bill seems to fully benefit the trucking industry while providing a minor financial strain on the rest of the motoring public. While one may not disagree with this fact, skeptical skeptic may believe this bill will come back to haunt the industry in the future.

As has been done with attempts at pension reform, it would not be the first time the State of Illinois has gone back on its word. Tough economic times may result in desperate measures which may require re-establishment of the CDF. For those who were in the industry just a decade ago, the CDF was an astronomical 36% increase of registration fees! A number which took a great deal of blood, sweat and tears from industry lobbyists to get lowered to the more reasonable number it is today.

The last thing that anyone in the industry would want is a new battle to develop when the economy is in the state of distress it is currently in. Illinois is only one public windstorm away from the “silver lining” to become a funnel cloud which could tear through the pockets of those in the trucking industry.


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