Editorial: Drivers, sports bettors, vapers and Airbnb users won't be toasting this fiscal new year in Illinois

Chicago Tribune

7 hours ago

As we prepare to enjoy fireworks over the lake or at a suburban venue close to home, there's another day we Illinoisans have come to recognize every year: New Tax Day, which we observe every July 1.
Like the black midges that hover around your forehead in the heat this time of year, another unwelcome summertime pest is the string of new state taxes unleashed upon us each year.
Following shortly after is an even scarier date on the calendar: property tax day (though that date keeps changing for those of us in Cook County.)
This year's menu of state tax hikes features features one old chestnut, plus a couple of new additions.
First up, our annual gas tax hike. That's right, the state gas tax is rising again, inching up from $0.470 to $0.483 per gallon for regular and from $0.545 to $0.558 per gallon for diesel. It's but a 2.82% increase, but a hike nonetheless, and that's how they get you.
Next, we've got a few newbies, part of the fun pack of new 'revenue' generators Springfield politicians packed into the most recent state budget. The $55 billion spending plan will cost you more — that is, if you like betting on sports, staying in Airbnbs, or consuming tobacco and nicotine products.
First up, users of sports wagering licensees — think FanDuel and DraftKings — will face higher taxes. A year after Springfield dramatically hiked taxes on sports gambling sites to plug yet another deficit, lawmakers struck at the bettors themselves this year, imposing a 25-cent-per-bet tax, which rises to 50 cents after $20 million in wagers. FanDuel and DraftKings already announced that customers in Illinois will see a new 50-cent fee for all bets starting Sept. 1. The flat 50-cent charge, the companies said, will help recover some of what they lost from last year's increase.
Next, the state is significantly increasing taxes on tobacco and nicotine products, including vapes and nicotine pouches.
To be fair, it's hard to argue in favor of gambling and tobacco, two things that have proved to have detrimental — even deadly — effects on many people's lives.
But taxes on short-term rentals? As we wrote recently, this industry provides access to comfortable, affordable rental options in neighborhoods not just in Chicago, but across the state, offering an alternative to high-priced hotels in busy commercial districts. It's concerning that now, platforms such as Airbnb and Vrbo will now be required to charge the 6% Hotel Operators' Occupation Tax — a change that could significantly increase costs for short-term renters across Illinois.
This cycle will continue until the state prioritizes being an affordable place to live and work over short-term political convenience.
State lawmakers understand that income tax hikes are wildly unpopular, a reality underscored by widespread rejection of Gov. JB Pritzker's graduated income tax hike proposal at the ballot box in 2020. So they look for revenue where there's less widespread pain and visibility. And yes, even though sin tax hikes are easier to defend, they're regressive, often falling on the backs of those least able to pay.
Eventually, policymakers will run out of these cat-and-dog tax hike options, and they'll be forced to consider raising income or sales taxes or taking on more debt. Or — maybe, just maybe — Springfield finally will reckon with the reality that Illinois can't go on this way much longer if we harbor hopes of being an affordable sanctuary for people who want proximity to a world-class city without a coastal price tag.
We have to remember, too, that the taxes being imposed now are propping up spending that has grown wildly since just before the pandemic. The most recent budget tops $55 billion, over $16 billion more than the $38.5 billion the state spent in fiscal year 2019, just before Pritzker took office.
That growth was supported initially by billions of dollars in federal aid. Now, to keep affording the increased tab, someone has to pay. Hence this annual grab bag of new taxes.
In some ways, you get the political culture you accept — meaning, if you keep electing lawmakers who hike your taxes, that's what you'll keep getting.
But in a lot of ways, changing that culture is out of voters' hands. This board has long decried Illinois' gerrymandering problem, a system that lets politicians pick their voters instead of the other way around. This goes a long way in explaining why overspending and relentless tax hikes are allowed to be the norm here, and why nothing ever changes. Most state lawmakers don't face a real threat of removal from office.
Until voters have real choices at the ballot box, New Tax Day will remain an annual reminder that in Illinois, fiscal pain is assumed — and political accountability is not.