Lightfoot considers ending Chicago gas tax amid record prices

Mayor Lori Lightfoot is considering a repeal of Chicago’s 8-cent-per-gallon gas tax to alleviate record-breaking prices. State gas taxes doubled in 2019 and state leaders are also considering a repeal.

Mayor Lori Lightfoot is considering eliminating Chicago’s 8-cent-per-gallon tax on gasoline as city residents struggle to pay record-breaking fuel prices at the pump. 

The move comes as Illinois lawmakers consider similar measures in Springfield to temporarily suspend the state gas tax or even repeal it entirely. Illinoisans currently pay the nation’s second-highest gas tax, and the state’s portion doubled in 2019 when Gov. J.B. Pritzker enacted a $45 billion infrastructure plan loaded with pork projects. 

Lightfoot said she saw gas prices near $5 a gallon on the city’s South Side. 

“I’ve literally never seen anything that bad in my lifetime…. That is real pain people are experiencing,” Lightfoot told Crain’s Chicago Business.

Illinois’ statewide average March 14 was $4.57 compared to the national average of $4.33. The Chicago city average was $4.85.

Petroleum analysts predict these rising prices could cost city residents $700 more in gas expenditures this year than 2021. 

Chicago’s 8-cent-a-gallon gas tax is estimated to generate $109 million in revenue this year after the city raised the tax by 3 cents a gallon in 2021 – the third city gas tax increase in 18 months.  

Chicagoans pay the 8-cent city gas tax, an additional 39 cents in state taxes and 6 cents in Cook County taxes. 

City drivers pay another 10% of the before-tax price of gas at the pump in sales tax. Illinois is one of seven states that levies sales tax on top of gas taxes, which is essentially taxing the taxes. 

The city receives 1.25% of the sales tax revenue while Cook County takes 1.75%. The state then gets the remaining 6.25% in sales tax on gas.

All told, taxes add about $1 to every gallon in Chicago.

Patrick De Hann, head of petroleum analysis at GasBuddy, said these new prices will be the longest lasting in history.

“It’s a dire situation and won’t improve any time soon. The high prices are likely to stick around for not days or weeks, like they did in 2008, but months,” De Haan said.

While Lightfoot provided few further details, policy options under consideration range from a permanent repeal to a temporary holiday.