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Advocacy Groups Challenge Gov. Quinn’s Proposal to End Natural Gas Tax

Governor Pat Quinn wants to eliminate the natural gas tax to provide financial relief for some Illinois residents and businesses, but a taxpayer advocacy group charges that consumers using other forms of energy will be left out.

“It will be a broad exemption that does not target those who are most in need…if that is the purpose of it in the first place?” said Tom Johnson, president of the Taxpayer’s Federation of Illinois TFI.

Quinn’s plan, outlined in his State of the State address last month, would save customers $160 million that the tax brings in every year. If the plan is approved by the legislature, Illinois will be the only state in the Midwest without a natural gas utility tax on manufacturers, retailers and everyday families.

Consumer advocates generally support Quinn’s cut, but say he should go further by providing relief for residents who use other forms of energy.

English: Gov. Pat Quinn making a point at Gree...
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Quinn’s plan would target certain manufacturing companies.

Most companies use a combination of electricity and natural gas to produce products, said Denzler.

The impact of the plan will be company specific, meaning it depends on which source of energy the company uses. For instance, the agricultural industry that uses natural gas to power the dryers to dry grain would benefit from this plan, said Denzler.

“This plan will save consumers and businesses money, money that can be used to hire more workers in order to fix our slumping economy,” said Jim Chilsen, spokesperson for Citizens Utility Board (CUB).

The Utility Board is a major supporter of the plan and has urged consumers to tell the General Assembly to “ditch the natural gas tax.”

CUB reported that the $160 million comes from more than 3.5 million residential gas customers, 250,000 retailers and more than 10,000 large businesses and manufacturers.

CUB estimates that eliminating the gas tax would save typical consumers roughly $30 to $40-per-year. Businesses that potentially use a lot of natural gas, like farms, could see savings of thousands of dollars a year, which would be put back into the economy.

Chilsen acknowledged that the plan does not include consumers who use other forms of heating, such as electricity and oil or propane gas. But he is excited about the 80 percent of homeowners who do use natural gas to heat their homes and the relief the tax exemption will bring them.

Johnson, of the taxpayer advocacy group, is more concerned with the bias presented in this plan and the loss in revenue to a state budget that already has an 8 to 10 percent deficit.

“There needs to be a more narrow exemption structure…one that targets the people who really need it,” said Johnson. “Natural gas heats some people’s homes, but not everyone.”

He pointed out that some rural Illinois homes are heated by propane gas or home heating oil, not natural gas. Also, some consumers use electricity, not natural gas.

For the past three years the Taxpayers Federation of Illinois has opposed new and expanded (increase in cost) income and sale taxes. The organization also opposes the elimination of tax credits, deductions, and exemptions and continues to do so because of the state’s dire fiscal condition. Even after the temporary tax increase enacted in January 2011, the state’s budget deficit is still more than $11 billion.

“Lets create a fiscal plan that will balance the budget before making cuts,” said Johnson.

The Illinois Manufacturers’ Association IMA said Quinn’s plan is a small step in the right direction although they would like this plan to go further in the future, according to Mark Denzler, vice president of the organization.

“We have tried to pass legislation for 5 or 6-years now to eliminate or reduce the state’s taxes on electricity for manufacturers and we will continue to fight for it,” said Denzler. “But we do support the governor’s plan.”

“Of course the plan, just like any other, could be better, but it is what it is and we support it,” said Chilsen. “You don’t help the economy by enforcing more taxes on consumers.”

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