Board Policy
Illinois Chamber Tax Institute Tax and Fiscal Policies

adopted June 2006

The Illinois Chamber of Commerce Tax Institute believes that Illinois’ fiscal policy and business tax laws should actively promote economic growth in Illinois by encouraging increased capital investment, productivity, and the creation of new job opportunities for the citizens of Illinois, by decreasing the overall tax burden and costs of doing business, particularly those costs associated with unnecessary and burdensome tax administration at the federal, State or local level.

To ensure economic growth and a fair and competitive tax climate for our members, the Illinois Chamber of Commerce Tax Institute strongly recommends adoption of the following pro-business Illinois tax policy:

Business Fees & Dedicated Funds

The Illinois Chamber opposes the imposition of business fees in lieu of taxes to fund general operating costs of the states and we support the implementation of a uniform management and oversight program for the administration and assessment of State imposed fees.

Business Perspective: The Illinois Chamber has challenged the constitutionality of the State’s authority to impose excessive fees to generate revenue for the State’s General Fund. The Chamber lawsuit places two primary questions before the court. First, is there a fundamental difference between a fee and a tax? Second, does the Constitution protect a fee payer from the power of the State of Illinois to arbitrarily impose excessive revenue demands upon that fee payer or a class of fee payers?

The State would have us believe that a fee and a tax are indistinguishable and interchangeable mechanisms to generate revenue. The State would also have us believe that it is both acceptable and constitutional to impose an excessive rate on any fee in order to gain revenue for the general welfare and public good of the state.

At issue is whether the definition of a fee is sufficiently narrowly defined so as to protect a fee payer from an abusive overreach on the part of a government. The Supreme Court is being asked to provide confidence that the State’s fee structure is calculated uniformly and applied in a consistent manner. Without a favorable ruling government policy makers will be given a green light to arbitrarily single out and choose among those fee payers who must assume an additional unrelated financial burden and those fee payers who do not.

The Illinois Chamber strongly believes that fees should be clearly distinguished from taxes and specific industry fees should not be used to fund general state operating expenses. We recognize that fees are an important source of revenue for the State when used properly in one of the following roles:

                · As a service or user charge for discretionary services. For example, a charge for those wanting to access state parks, or a fee for expedited services at the Secretary of State's office.

                · For costs associated with licensing professionals. License fees should be limited to the actual costs of issuing and enforcing licenses because the license is not optional for those who want to engage in the licensed activity and because licenses otherwise become hidden taxes.

                · As a way to regulate business activity. Business regulatory charges are usually aimed at achieving a specific policy objective like reducing pollution or limiting use of natural or public resources. Costs associated with such regulation should be documented so the regulated entities are able to observe whether the regulatory fee is achieving the desired result.

Developing criteria for setting fees and making sure that the fee level corresponds to actual costs should lead to fewer fee increases, more affordable fees and more accountable government.

Legislation should mandate that any proposals to implement a fee-funded state program or service must:

                · Clearly define the program or service to be funded by a fee and its scope and intent;
· Require a fiscal note that forecasts first year start-up costs and estimates annual costs of the program and service. The fiscal note should be public and readily accessible;

                · Clearly state whether the proposed fee is intended to cover the full costs of the program or service, offset a portion of the program/service costs, or exceed costs. If fees are designed to exceed actual administrative costs, the legislation should specify how the excess revenues will be used; and

                · Specify whether the administering state agency has the authority to alter the fee amount by rulemaking.

The General Assembly should also take into consideration whether the service or program would be more cost effective if privatized or outsourced.