Airlines' ability to avoid some sales tax on fuel purchases in Chicago would disappear under a state bill that would close a well-publicized tax loophole. It proposes funneling the extra tax money to fund public transit for seniors and disabled people.
A state bill introduced by Rep. Lou Lang, R-Skokie, on Thursday was promoted from a House committee on an 8-5 vote and is headed for consideration by the full House.
The bill proposes that aircraft fuel be taxed in the place where it's used by planes. That would be Chicago in the case of commercial airlines that fly from O'Hare and Midway airports.
An unusual state rule that taxed fuel where an order for it was "accepted" was exploited by airlines, including United Airlines and American Airlines. They and other companies opened satellite sales offices in Kankakee, Channahon and other outlying municipalities to technically accept the purchases there, even though the product was used elsewhere. For the two large airlines, the product was fuel used at O'Hare. Those suburbs then shared their local tax receipts with the companies as an incentive to establish sales-processing offices.
More details here.
