Some south suburban shoppers may seek savings on gas, cigarettes in Indiana
Whether it’s worthwhile to drive to the Hoosier state to buy gas depends on your situation. How far you live from the border and what other products you might buy will affect the economics of your shopping decisions.
People who live in Orland Park or Tinley Park, for example, might not want to sacrifice an hour of their time to fight traffic and drive 40 to 50 miles round-trip to fill up in Hammond. They would likely burn a couple gallons of gas and any money they might hope to save.
People who drive until the low-fuel warning light comes on might not be able to risk making the trek to save a few bucks on gas.
But consumers who live in Calumet City or Lansing and also buy cigarettes might save a bundle by crossing the border. Such behavior could negatively affect sales at gas stations and convenience stores in southern Cook County and eastern Will County.
“We think it’s going to be devastating to small businesses,” Bill Fleischli, executive vice president of the Illinois Petroleum Marketers Association and Illinois Association of Convenience Stores, said of the higher taxes.
“It will put a lot of small businesses close to the border out of business,” Fleischli said.
Cook County’s short-lived penny-an-ounce sweetened-beverage tax showed that a lot of Illinois taxpayers were willing to take their business elsewhere. Cook County officials repealed the “soda tax” after retail sales took a big hit when people shopped in neighboring counties and out of state.
The new, higher taxes on gasoline and cigarettes are statewide. That means Will County won’t be as attractive a destination for shoppers protesting higher taxes, but Indiana will remain a viable option for many in the Southland.
“Stores will close, competition will be eliminated,” Fleischli told state lawmakers, according to testimony that he provided. “All tax receipts will decrease and closed facilities will increase the blight in the towns.”
Illinois has charged a 19-cent per gallon motor fuel tax on gasoline since 1990. Lawmakers recently voted to double the rate, to 38 cents per gallon, effective July 1. Also, the tax will be tied to the rate of inflation moving forward, meaning it will likely increase by a penny or more every year.
The higher taxes on gasoline, along with higher vehicle-registration fees, revenue from expanded gaming and other taxes and fees, will help pay for a
“We’ve worked hard in this session, in fact, to lessen the burden on many people across the state, and we’ll continue to look for ways to do that,” Gov. J.B. Pritzker said on June 2, the
Indiana charges a motor fuel tax of 29 cents per gallon. In some cases, current prices at the pump in Indiana and Illinois are about the same. In other instances prices are lower in Indiana, despite the fact that the Hoosiers currently charge a dime more in state fuel taxes per gallon.
The website Gas Buddy is a reliable source of information about current gas prices. On Monday, it showed gas selling for between $2.76 and $2.79 a gallon at stations near LaGrange Road and 191st Street in Tinley Park. Signs at the stations verified the prices listed on Gas Buddy.
Gasoline on was selling for between $2.95 and $2.99 a gallon Monday at stations in Lansing, Thornton and Calumet City, according to Gas Buddy. Gas was $3.29 a gallon in Sauk Village, $3.19 a gallon in Lynwood and $2.91 a gallon in Crete.
At the same time, motorists in Indiana could buy a gallon of gas for $2.75 in Hammond, $2.76 in Schererville, $2.78 in Dyer and $2.89 in Munster.
Various other state and local taxes affect the price of gasoline. Illinois charges a state sales tax of 6.25%, while in Indiana the state sales tax rate is 7%. Cook County charges an additional 1.75% sales tax.
Many Illinois municipalities also charge an additional sales tax. Local sales tax rates are often 1%, but they could be as high as 3%. The federal tax rate is 18.4 cents per gallon.
The state legislature last month gave Will and Lake counties the ability to charge up to 8 cents a gallon in gas taxes. DuPage, Kane and McHenry can now increase their gas taxes to 8 cents a gallon from 4 cents. Also, any municipality in Cook County can now levy a gas tax of up to 3 cents a gallon.
Gas-station owners will have to either pass along the 19-cent fuel tax increase to consumers or take a hit on profits, Fleishli said. The gas-tax increase is one prong of a triple whammy about to hit members of his trade groups, he added. The other two factors are the cigarette-tax increase and the higher minimum wage in Illinois, he said.
State taxes on a pack of cigarettes increase $1 on Monday in Illinois. Prices here are already $2 a pack higher than in Indiana, according to the Sales Tax Handbook website.
“Consumers will not have to make a decision about crossing borders, it will be made for them, as Illinois facilities will be closed and crossing the border will be the only option,” Fleishli told lawmakers.
Many Illinois employers also will have to contend with higher personnel costs beginning in six months, he said. An estimated 1.4 million Illinois residents currently make less than $15 an hour, the
On Jan. 1, the statewide minimum wage increases from to $9.25 per hour from $8.25, which it has been since 2010. The minimum wage will increase again to $10 per hour on July 1, 2020, and will then go up $1 per hour each year on Jan. 1 until hitting $15 per hour in 2025.
Illinois residents routinely cross borders for cheaper gas and cigarettes already, Fleischli said. In May, the Illinois Department of Transportation closed the Bayview Bridge over the Mississippi River near Quincy due to flooding.
“Sales volumes on the Illinois side went up 100% while the bridge was closed, then went back down when the bridge reopened,” he said. “There is evidence all over the state” of consumers near the border seeking better deals in neighboring states, Fleischli said.
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