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How Will an Illinois Fuel Tax Increase Impact Border Businesses?

Missouri already enjoys significantly lower fuel taxes than Illinois, but when outgoing Chicago Mayor Emanuel recommended a $.20 to $.30 per gallon increase in Illinois' fuel tax in December to fund a new state transportation bill, Illinois businesses stood up and took notice. If the measure were to pass, there could be as much as a $.50 per gallon difference in Missouri and Illinois fuel prices. How will that impact businesses on the border between the two states?

Illinois already has a fuel excise tax of $.19 per gallon, one of the highest in the country. Combined with the general sales tax, that's a total of $.3732 per gallon, about 20% higher than Missouri. With over 800,000 Illinois citizens living in cou

nties bordering Missouri, this could create a strong drive to bring money into Missouri. MotoMart President Robert Forsyth mentions, “Go over to our MotoMart on Riverview Drive, the first stop in Missouri, and look at all the license plates from Illinois. People underestimate the economic impact of people choosing to buy gas out of Illinois, and they will make a trip to do that.”

Customers mention that they expect that an added fuel tax would have the same effect that higher tobacco taxes have had on Illinois. With cigarettes nearly $2 per pack less in Missouri than Illinois, smokers are already crossing the border to save money, and spending more money in Missouri while they're in the state. After all, why bother going to another shopping center across town when there's one right next door to where they're buying fuel or cigarettes? Border businesses in Missouri may benefit from an Illinois fuel tax increase, but businesses in Illinois may pay the cost of the process, causing an unintentional significant economic impact on the state.

The potential of an Illinois fuel tax increase could have strong effects on border businesses, and not all of them good. If Illinois politics have left you considering crossing the border to run your company, AccountRely can help. We have a wide range of experienced business professionals who can help make the transition easier and who have experience doing business in the State of Missouri. Please feel free to reach out today to explore your prospects.

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