SPRINGFIELD - Gov. Rod Blagojevich has promised to provide some relief from high fuel prices, but not for the millions of motorists facing stiff prices at the pump.
Rather, as part of a package of incentives offered to keep United Airlines from moving its headquarters out of state, the governor has pledged to work with the General Assembly to reduce the sales tax it charges the air carrier when it fills the tanks on its planes.
The move comes as Blagojevich and Democratic leaders have soundly rejected similar proposals to reduce the amount of sales taxes the state charges motorists when they fill up their cars, trucks and SUVs.
Blagojevich spokeswoman Rebecca Rausch denied the incentive was a case of the governor looking out for Big Business instead of the little guy.
"It was important for Illinois to do what it took to keep that company here," said Rausch.
The perk, which could be acted upon when lawmakers return to action after the November election, is not the first time Blagojevich and lawmakers have given a large company a break on gas taxes while skirting the issue for motorists.
In August 2005, Blagojevich signed legislation allowing United Parcel Service to save up to $100,000 per year on fuel charges.
Just as Rausch said the United incentive was aimed at keeping an economic engine in Illinois, supporters of the UPS break said giving the world's largest package-shipping company a break could create more jobs for a corporation that already contributes $30 million per year in taxes to state and local governments.
United and other air carriers pay the highest jet-fuel taxes in the U.S. when they fill up in Chicago, thanks to the state's gas tax, as well as local city taxes.
The incentive package was announced after the company dropped its threat to leave Illinois and announced it would move into downtown Chicago. Along with tax breaks from the city and the proposed gas tax break, state taxpayers also will be on the hook for another $1.35 million in grants and assistance to the company.
Since fuel prices began their rise to the $3 per gallon level, state government has been raking in added revenue because it charges a 5 percent tax on the sale of each gallon of gas.
As the price rises, so does the state's revenue. According to recent estimates, Illinois received about $137 million in unexpected revenue from motor fuel purchases during the last fiscal year because of the run-up in prices.
Republican gubernatorial candidate Judy Baar Topinka has called for a gas tax holiday for motorists, in which the state would forego collecting some of the tax in order to bring down fuel prices.
Blagojevich, a Democrat, however, has not signaled any support for such a proposal.
Rausch defended the proposed fuel tax reduction for United, which has just exited bankruptcy proceedings and posted its first positive quarter this week.
"United employs 16,000 people in Illinois. Those are a lot of affected families if they decide to move," said Rausch. "Gas prices are certainly problematic for the individual driver as well and we're keeping all of our options open when it comes to gas prices."
Andrew Ross, a spokesman for the Illinois Department of Commerce and Economic Opportunity, cautioned that the tax break for United is still under negotation.
"This is really in the beginning stages," said Ross.
Posted in News on Tuesday, July 25, 2006 12:00 am Updated: 10:54 am.
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