Tax Breaks and Subsidies to the Coal Industry
Cost the Illinois State Budget Nearly $20 Million Each Year
Despite the fact that Illinois faces an annual budget deficit of $9 billion, state legislators continue to provide millions of dollars in taxpayer subsidies each year, claiming that coal mining is one of the biggest economic drivers in the state. But here are three simple facts about coal and the state’s economy that might cause you to think differently:
FACT #1 – Taking all revenues into account alongside all costs to the state and taxpayers (including manufacturing and equipment tax exemptions, various tax incentives, and direct grants) the coal industry comes at a net cost of $19.8 million to the Illinois budget.
FACT #2 – Coal mining and support activities play a relatively insignificant role in the overall Illinois state economy, representing less than 0.2 percent of private industry economic activity in 2010, and just 0.3 percent in 2013 (source Center for Tax and Budget Accountability, July 2015). The extent to which Illinois lawmakers subsidize the coal industry each year is not justified by the industries overall contribution to the state’s economy. Rebalancing the budget and cutting the subsidies could help support the other 97% of economic activity in the state.
FACT #3 – Coal mining remains a significant contributor to the local economy of towns where mining is taking place. But when resources diminish, and mining is no longer operational, companies pack up and leave communities with few or no economic alternatives. The closing of Bob Murray’s New Era mine in mid-2016 will result in the layoff of several hundred workers in a typically-sized downstate Illinois town that has just 933 residents..
It impacts everybody,” said David Harrawood, the village’s mayor. “It doesn’t just impact coal miners. It impacts trucking businesses, the stores, all their vendors. It’s not just one segment. Down here, we’re all tied together.
An October 23, 2015 study by the Center for Tax and Budget Accountability and Downstream Strategies estimates that a coal severance tax could generate new revenue for Illinois communities, potentially generating $141.5 million in annual revenue in 2015 for state and local governments. Bringing the majority of those funds back to active coal-producing communities could help them begin to diversify their economies now impacted by the “boom and bust” cycle of coal.
Illinois is just one of three of 25 coal-producing states in the country that does not collect a severance tax. Studies show that a small excise fee placed on the value or amount of coal extracted does not cost jobs, but does bring substantial revenues bak to state and local governments.
It’s time for the coal industry to pay its fair share, and help Illinos’ hard-working families get ahead.
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