The Illinois State Chamber of Commerce, in conjunction with the Illinois Rolling Stock Alliance, a recently formed coalition of 32 Illinois-based interstate transportation groups,
are critical of Gov. Rod Blagojevich's proposed elimination of the state's rolling stock tax exemption.
The two organizations said that in an already recessionary economy, the repeal would increase the cost of doing business for the state's transportation industry by $92 million in just the first year. The repeal is part of the governor's proposed $1.32 billion in business tax increases.
Currently, interstate transportation companies operating in Illinois are exempt from paying sales tax on purchases of the trucks, trailers, railcars, aircraft and buses needed to move people, products and produce to and through the state. Repairs to and replacement parts for rolling stock are also tax exempt.
Wisconsin, Iowa, Missouri, Indiana and Kentucky all offer a sales tax exemption on rolling stock. Illinois' exemption, which has been in place since 1968, was initiated to prevent the loss of vital rail and freight jobs to those and other Midwestern states. Today, virtually every state in the U.S. has some form of rolling stock exemption. "There is little doubt that repeal of this tax provision will send jobs and business to our neighboring states," said Douglas L. Whitley, president and CEO of the Illinois Chamber.
"Rail and truck transporters will always need to use Illinois' rail system and highways," said Joseph Ciaccio, president of the Illinois Railroad Assn., "but they don't need to buy their fleets here or make repairs here if they can save money by doing business across the border."
Don Schaefer, vice president of the Mid-West Truckers Assn. said, "We know of one trucking company, with terminals in Edwardsville and St. Louis, that will lose nearly $350,000 if it continues to base its vehicles in Illinois. Of course they're looking seriously at transferring their operation to St. Louis."
"Illinois has been losing manufacturing jobs, yet there has been growth in transportation, warehousing and distribution jobs in our state. This attack on one of the few bright spots in the state's economy is ironic as well as counterproductive and ill-timed," said Whitley. "It's yet another example of an expedient, short-sighted desire to take more money from the state's job providers that will have a long-term negative impact on job growth. Instead of nurturing the transportation and logistics industries, this proposal looks like a job killer to me."
The Illinois Rolling Stock Alliance is a coalition of transportation companies and associations opposing the repeal of the rolling stock tax exemption. Members include the Illinois State Chamber of Commerce, the Chicagoland Chamber of Commerce, the Mid-West Truckers Assn., the Illinois Railroad Assn., the Air Transport Assn., United Parcel Service, as well as 26 other organizations.