Four bits a gallon (or more) for a state gas tax?
Governor Martin O’Malley, he of the trial balloons, may have yet another one up his sleeve.
His latest (of many) tax proposals would extend the state’s 6% sales tax to purchases of gasoline, on top of the current 23.5 cents per gallon surcharge the state takes. If adopted, Maryland would join a handful of other states which use this nebulous practice of profiting off high gasoline prices.
The other states which do this are California, Florida, Georgia, Illinois, Indiana, Michigan, and New York. To see what impact this proposed tax would have on our wallets, we need to use three methods of comparison. First, here are the per-gallon gasoline taxes charged by each of these states and Maryland, ranked lowest to highest, not including sales taxes or various fees added by each state: (Source)
- Florida, 4 cents per gallon
- Georgia, 7.5 cents per gallon
- New York, 8.1 cents per gallon
- Indiana, 18 cents per gallon
- Illinois, 19 cents per gallon
- Michigan, 19 cents per gallon
- Maryland, 23.5 cents per gallon
- California, 35.7 cents per gallon
And now the sales tax rates which are (or would presumably be) applied to gasoline, also listed lowest to highest:
- California, 2.25%
- Georgia, 4%
- Maryland, 6%
- Michigan, 6%
- Illinois, 6.25%
- Indiana, 7%
- New York, 8%
- Florida, 12%
Finally, the combined bite between all taxes (federal, state, and local) impacting gasoline in the states which charge sales tax, which includes where Maryland would eventually rank. To do their calculations, API uses the average cost per gallon in each state according to AAA as of 1/1/12. For Maryland, I couldn’t find the price on the specific 1/1 date but according to the latest AAA figures, the average price one month ago from today was $3.26 and that should suffice for being roughly the price on January 1st. Again, this is lowest to highest.
- Georgia, 47.8 cents per gallon
- Florida, 53.4 cents per gallon
- Illinois, 57.3 cents per gallon
- Indiana, 57.3 cents per gallon
- Michigan, 57.8 cents per gallon
61.558.9 cents per gallon*
- California, 67 cents per gallon
- New York, 67.4 cents per gallon
If this is passed, Maryland would have the fifth-highest total gasoline tax in the country, trailing New York, California, Connecticut (also 67 cents per gallon) and Hawaii (65.5 cents per gallon.) Maryland drivers would be ceding a much higher bite out of their wallets than their neighbors in West Virginia (51.8 cents per gallon), Pennsylvania (50.7 cents per gallon), Washington D.C. (41.9 cents per gallon), Delaware (41.4 cents per gallon), and Virginia (38.2 cents per gallon.) Retailers in those states who are fortunate enough to be close to the Maryland line are probably licking their chops about now.
Of course, this doesn’t factor in the addition of some of MOM’s other trial balloons like a separate 15 cent per-gallon increase in the gasoline tax or increasing the sales tax to 7 percent. And as Todd Eberly points out at The FreeStater Blog, this could all be a feint to make a direct 15 cent additional surcharge more palatable.
As it is currently proposed, the gasoline sales tax would be phased in 2% at a time so drivers wouldn’t be hit all at once. But when they’re projecting $613 million in new annual revenue at a time when the state is over $1 billion in the hole, it will be a surprise if they don’t rush the process. It may get passed this way for now, but wait for the new, improved bill to accelerate the increase next session when money is still tight.
We’re also being told that a gas tax increase is about infrastructure jobs in fixing bridges and roads. But the Maryland Public Policy Institute does a magnificent job of not only blowing that argument out of the water but also pointing out the folly of public transportation while they’re at it. Simply put, it’s another component of the War on Rural Maryland as those of us who drive greater distances because we choose to live away from urban woes will be subsidizing those who ride the buses or light rail in more-developed areas. That group doesn’t quite comprise the 1% but they’re pretty darn close, and they don’t come close to paying their own way.
Putting private transport out of reach to the average family through higher prices also fits neatly into the goals of so-called “Smart Growth” and “sustainable development”, which strives to increase the usage of mass transit. Perhaps this is a line of thought more suited to the tinfoil hat crowd, but one can’t deny it’s much easier to control the population if their movements are controlled.
In any event, the first step in rebuilding Maryland’s crumbling transportation infrastructure needs to come from locking away the Transportation Trust Fund from greedy governors who can’t shake their spending addiction. And if we take back the half of transportation spending we waste on a tiny percentage of commuters and instead gave them a more appropriate share of a nickel per dollar, there are a lot of bridges, road widening projects, and traffic control measures which could be completed for the rest of us who get tired of sitting in traffic.
On the Eastern Shore, we already will bear a significant burden from the newly increased tolls on the Bay Bridge, so we should get a break when it comes to gasoline taxes. The state should quit using the knee-jerk reaction it always seems to have about raising taxes and instead consider spending the vast amounts already collected more wisely.
* I was also taxing the existing tax, not the actual price. Subtract out the 41.9 cents we currently pay in taxes and the sales tax is actually on $2.84 of the $3.26 per gallon.