Sports Betting, Gas, E-Commerce Taxes Fund Illinois Rebuild

Illinois Gov. J.B. Pritzker approved a $45 billion capital construction plan, funded in part by doubling the gas tax, legalizing sports betting, and expanding the sales tax on e-commerce transactions.

Pritzker, a first-term Democrat, on June 28 signed several bills designed to rebuild the state’s crumbling infrastructure, including two revenue bills, S.B. 1939 (P.A. 101-32) and S.B. 690 (P.A. 101-31). The revenue provisions are designed to create a sustainable stream of cash, estimated at nearly $2.7 billion annually when fully implemented, for a state plagued with fiscal challenges.

“The Rebuild Illinois plan transforms our state’s approach to transportation infrastructure, finally treating our roads, bridges, and railways like 21st century investments and not relics of the past,” Pritzker said during a bill-signing ceremony.

S.B. 1939 would double the 19-cent-per-gallon motor fuel tax beginning July 1 and index the tax annually to changes in the Consumer Price Index. According to a revenue summary provided by the administration, the new tax is expected to generate $590 million in FY 2020, and another $600 million in sales taxes on motor fuel purchases.

S.B. 1939 also includes an increase in vehicle registration fees, registration fees for electric vehicles, vehicle title fees and truck registration fees, generating $675 million in FY 2020.

Much of the revenue generated by S.B 690 would come from a major expansion of gambling. The bill includes a new sports betting system that would tax wagering revenue at 15%. The bill also provides six additional casino licenses, additional gaming positions at racetracks, and increases in the video gaming tax. The administration estimated the gaming provisions would generate more than $350 million for FY 2020.

S.B. 690 also expands the reach of Illinois’ sales tax as outlined in the U.S. Supreme Court’s landmark ruling in South Dakota v. Wayfair. While Illinois already taxes transactions by remote sellers with economic presence in the state, the new law ensures $200 million in additional collections by permitting tax software vendors known as certified service providers to perform tax compliance functions at no cost to the retailers. The law also requires remote sellers to collect taxes payable to cities and counties.

Finally, S.B. 690 imposes a new $1 per pack tax on cigarettes, generating $160 million annually, and a 6% to 9% parking garage tax, generating $60 million.