December 30, 2021
The Civic Federation annually releases a report on consumer taxes in the City of Chicago. Consumer taxes are tied to the use or consumption of certain goods and services that can be charged directly to consumers through retail transactions or passed on to consumers by businesses or governments. Consumer taxes in Chicago are imposed at various levels of government, including the City of Chicago, Cook County, the State of Illinois and the federal government. This blog highlights changes in three consumer taxes since the Civic Federation’s 2021 Consumer Taxes Report was released in February 2021.
For a summary of the changes in consumer taxes taking effect last year, see the Civic Federation’s 2021 Blog Post on Consumer Taxes.
Two taxes have undergone rate increases:
Motor Fuel Tax, State of Illinois - The State of Illinois’ tax on motor fuel increases annually by the rate of inflation effective every July 1. For the period July 1, 2021 through June 30, 2022, the State’s tax rate is $0.392 per gallon of gasoline and $0.467 per gallon of diesel fuel. This was an increase of $0.005 per gallon. The increase in the State tax brings the composite rate in Chicago (including the state, federal, City and County gas tax and the State of Illinois’ $0.003 Underground Storage Tank Tax and $0.008 environmental impact fee) as of January 1, 2022 to $0.727 per gallon of gasoline and $0.862 per gallon of diesel.
Wheel Tax, City of Chicago - The City of Chicago vehicle sticker fee increases every two years. Effective January 1, 2022, the City’s vehicle sticker price will increase from $90.88 to $95.42 per year for small passenger vehicles and from $144.33 to $151.55 per year for large passenger vehicles.
Additionally, the following update has taken place since the release of the Civic Federation’s previous annual Consumer Tax Report:
Firearm and Ammunition Tax, Cook County - An Illinois Supreme Court ruling on Cook County’s firearm and ammunition tax resulted in a brief interruption in collections, but due to actions taken by the Cook County Board of Commissioners prior to final judgment by the Cook County Circuit Court, the tax will continue to be collected in 2022. The Cook County tax on firearms and ammunition was struck down in an Illinois Supreme Court ruling in the case of Guns Save Life, Inc., et al v. Zahra Ali, Director of the Department of Revenue of Cook County, et al. In its ruling issued on October 21, 2021, the Supreme Court found that the County’s tax violated the uniformity clause based on the premise that “where a tax classification directly bears on a fundamental right, the government must establish that the tax classification is substantially related to the object of the legislation.” The Court’s opinion highlighted that the County’s firearm tax ordinance did not direct revenue from the tax directly to any fund or program aimed at reducing or curbing the cost of gun violence.
In response to the ruling, the Cook County Board of Commissioners approved an amendment to the Firearm and Firearm Ammunition Tax Ordinance on November 4, 2021 to address the uniformity concerns expressed by the Illinois Supreme Court. The amendment, effective immediately, directed revenue from the sale of firearms and ammunition in Cook County to an Equity Fund, a special purpose fund directed specifically to fund violence prevention and reduction programs. The timing of the County’s ordinance amendment preceded the date the Supreme Court’s ruling was to be heard in the Circuit Court for final judgment on November 23, 2021. To allow time to comply with resuming collections, the County gave retailers until November 15, 2021 to begin resuming collection of the tax. The County plans to continue to collect this tax in 2022. There is no change to the previously existing rates ($25.00 per firearm and $0.05 per centerfire cartridge and a $0.01 per rimfire cartridge).
The Civic Federation will be releasing its full 2022 Report on Selected Consumer Taxes in the coming weeks.