Governors mull cuts in gas tax
With a gallon of gas breaking $3 and voters unhappy, state leaders across the country are taking a sudden, sharp dislike to gasoline taxes, proposing to eliminate the levies that are a mainstay for road programs — or at least suspend them for the summer.
Governors have floated ideas to trim or suspend state gas taxes in Maryland, South Carolina and Connecticut. State legislators are pushing similar measures in Georgia, New York and Nevada.
The proposals are winning vocal support from Republicans and Democrats alike, though none have yet become law.
Critics say the proposal is a mistake, questioning whether drivers would actually see the tax cut, the potential to undermine necessary road and transportation programs and the larger environmental impact.
Still, with elections later this year, the popularity of the idea was made clear in South Carolina when the Republican governor — who's been unable to win support for a number of other proposed tax cuts — quickly won bipartisan support for his proposal.
The gas tax is the most widespread target as constituent anger grows over gas prices, but it's not the only measure being considered.
California zeroed in on oil companies when a key legislative committee approved a windfall profits tax aimed at oil producers. Several state attorneys general have begun investigations into price-gouging, and governors in California and Maryland have asked state officials to examine potential gouging.
But as prices in many parts of the country top $3 for a gallon of gas, states are looking hard at the one part of that cost they can control — the state tax.
On average, states add 28.1 cents to each gallon of gas from a combination of excise taxes, business taxes and state and local sales taxes. It varies from a low of 8 cents in Alaska to a high of 49.5 cents in New York, according to the American Petroleum Institute. The federal government adds 18.4 cents to each gallon.
But consumers might have a hard time noticing any savings at the pump, especially if prices keep rising, experts said.
That's because retailers pay the tax when they buy gas from their distributor, and prices, as everyone has seen, can change quickly, said Rayola Dougher, manager of energy market issues for the American Petroleum Institute. So a spike in oil prices could easily swallow up a break from the state. Besides, prices often vary a few cents from station to station.
Others argue it's a misguided step for bigger reasons like the nation's dependency on oil or the impact of fossil fuels on the environment.
"Cutting the gas tax is a false solution. I don't think the public is fooled," said Rob Sargent, energy analyst with the environmental coalition called the State PIRGs. "It just delays the inevitable — dealing with the bigger problem — and that is our overreliance on oil."