After yearlong reprieve, Illinois grocery tax returns Saturday, while gas tax rises for second time this year
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A key component of Democratic Gov. J.B. Pritzker’s $1.8 billion reelection year tax relief plan will come to an end on Saturday as consumers will again start paying a state tax on groceries, while at the same time seeing a hike at the gas pump for a second time this year.
The temporary tax breaks — the gas tax reprieve ended Jan. 1 — were passed last year amid soaring inflation and record-setting gas prices, and they provided major talking points for Pritzker and his legislative allies ahead of the Nov. 8 general election.
“What we did last year was a temporary measure because we had very high inflation,” Pritzker said during an unrelated news conference in Chicago on Tuesday. “Inflation, you may notice, has come down. But we had very high inflation, and we wanted to do everything that we could, and we provided $1.8 billion of tax relief for families across Illinois.”
At the end of May, inflation in the U.S. was at about 4%, compared with roughly 8.6% at the end of May 2022.
Pritzker last year justified the tax relief by saying he and the Democratic-controlled state legislature “balanced the budget, eliminated the bill backlog and state government is now running a surplus.”
Republicans were dismissive of the tax relief, calling it an election-year ploy.
Income from the 1% tax on groceries that was suspended last July 1 and will be reinstated on Saturday goes exclusively to municipal governments. While the tax was on hiatus, the void was filled from a pool of $400 million in the state’s general revenue fund.
The $50.4 billion state budget that goes into effect Saturday includes a $20 million investment in a new program to expand grocery access to urban neighborhoods and rural towns.
The gas tax was set to jump by 2.4 cents per gallon, an increase based on inflation, last July, under a bipartisan measure passed in 2019 to pay for $45 billion in road and bridge projects throughout the state. The tax freeze allowed drivers to continue paying 39.2 cents per gallon through the end of 2022.
The average price in Illinois for regular gasoline a year ago was about $5.40, but had dropped to just under $4 as of Tuesday.
The six-month freeze resulted in drivers being hit with two gas tax increases this year. On New Year’s Day, the gas tax rose by 3.1 cents, to 42.3 cents per gallon. Saturday’s increase will raise the tax by another 3.1 cents, to 45.3 cents per gallon.
As part of the tax relief deal, gas stations were required to post signs about the freeze at pumps, a provision owners unsuccessfully fought in court as an infringement of their First Amendment rights.
Republican state Sen. Donald DeWitte, of St. Charles, said that if the Democrats truly wanted to make a difference for taxpayers, they would’ve made the suspension of the 1% grocery tax permanent. DeWitte also said some relief on the separate state sales tax for gas would’ve had more of an effect on consumers at the pump.
“I think, unfortunately, that taxpayers across the state receiving this double-whack, if you will, on July 1, is nothing more than proof that Democrats decided to implement these cuts simply as election-year political gimmicks to generate some goodwill on the part of voters to support Democrats in the election,” he said.
Colleen King, a spokesperson for House Republican leader Tony McCombie, pointed to Democratic initiatives like the health care program for immigrants in the country without legal permission in arguing that a budget with different priorities could provide “more than enough (state) money” for municipalities” without a grocery tax.
“Living in Illinois continues to be more expensive for Illinois residents at the hands of the Illinois Democrats’ tax and spend habits,” King said in a statement.
Outside a Mariano’s grocery store in Skokie on Wednesday morning, shoppers were both nonchalant about the return of the grocery tax and critical of the overall tax burden on Illinois residents.
Mark Sandora, 56, said the effects of the grocery tax reprieve were negligible, and given inflation the state could have done much more. “The prices of groceries are so high,” he said.
Roberto Irizarry, co-owner of a BP station in Chicago’s Uptown neighborhood, said the 3.1 cent per gallon increase on Saturday will likely be noticed more by people who drive for a living, like Uber and taxi drivers, than his average customer.
“We try to stay competitive with everybody in the neighborhood,” Irizarry said. “Even though they raise up the prices, we try to go down a little bit. It always balances itself out.”
Chicago Tribune’s Dan Petrella contributed.
