Illinois collects 2 percent fee on local sales taxes
The Illinois Department of Revenue exists to collect taxes. It operates on a $909 million budget that comes from our taxes.
But it was able to convince state lawmakers that it wasn't getting enough money to administer all the special tax rates imposed by local governments or local taxpayers for special purposes. Flood control, mass transit, special economic development districts financed by something above the base sales tax rate of 6.25 percent presented a burden for the revenuers.
So when state lawmakers were busy last summer boosting your state income tax rate to 4.95 percent after holding the state budget hostage for two years, they gave a little somethin' somethin' to their tax collectors. The Department of Revenue got a 2 percent administrative fee for collecting those extra sales taxes.
So far, the fee is pulling in $6.2 million a month, or nearly $1 million more than they anticipated.
First, does it really cost $6.2 million a month for the state to plug a different rate into the computer to calculate how much sales tax goes back to a local government? For that amount you'd expect some AFSCME version of Bob Cratchit sitting on his high stool by candlelight working double overtime late into the night. (Don't worry, though. Bob will retire at age 52 and never pay state taxes on his generous pension).
Second, this is a tax on taxes. They call it a fee, but it is a tax by the state revenue department for doing the job it was created to do. It so far took $90,000 from Fairview Heights, which is a police officer's salary for a year and a hidden tax on the public.
There was a bill introduced in February to repeal the 2 percent fee-tax. House Bill 5106 is in committee and has no co-sponsors.
That should change, and the state legislature should repeal the fee-tax. You should tell your state representative and senator that you don't expect to be taxed for the privilege of paying taxes.