Surprise!  The Illinois legislative leadership made an eleventh-hour deal to dramatically raise taxes on alcohol, soft drinks, and candy and shoved it through the legislature within two days.  Ok, who really expected accountable government to return to the Prairie State after all?

To help fund a massive transportation spending package (HB 255, HB 312, HB 2400), a backroom deal was made between Senate President John Cullerton (D) and legislators to raise taxes by some $600 million per year.  The tax amendment was proposed last week on the 20th and passed both chambers of the legislature by the 21st.

If signed by Gov. Pat Quinn (D), the tax on distilled spirits would rise by 90% to a staggering $8.55 per gallon.  Similarly, the tax on wine would rise by 90% and the tax on beer by 25%.  The amendment also sneekily restructured the tax code to reclassify the tax status of soft drinks and candy to raise even more money.

While all tax hikes are avoidable, the worst part is that these taxes were especially so.  The revenue will be directed toward a $26 billion transportation infrastructure spending plan.  However, as the legislature could have learned from their fellow Democrats in Chicago or from the neighboring state of Indiana, privatization projects for transporation could have fixed or built new infrastructure without raising taxes.

In 2005, Chicago leased the Chicago Skyway landing the city $1.8 billion in new funding and allowing them to pay off debt and use the money for other operating costs. Similarly, in 2006, the Indiana Toll Road was leased for an upfront payment of $3.8 billion.  Privatization projects invest in infrastructure, create jobs, promote economic growth, and bring billions into the state’s coffers, all while avoiding unnecessary tax increases.

As the legislature considered the tax increase, Gov. Quinn rightly stated his hesitation to raise the alcohol tax.  Don't get too excited though: the Governor is continuing to push for a 50% increase in the income tax.

Click here for a copy of ATR's letter to the legislature opposing the tax increase.

(photo by Vidiot)