Monday, June 09, 2008

Gas Prices Up, Gas Taxes Up, Gas Use Down

As gas prices rise, and rise, and then rise some more, several states are set to raise the local gas tax. The average state gasoline sales tax is 28.6 cents/gallon while the federal gas tax adds another 18.4 cents/gallon. The fed tax hasn't changed since 1997, but the tax in many states is linked to the daily price of gasoline, so as the price rises, the tax increases. Lately, that has been happening everyday, sometimes only hours separate price increases.

Presidential candidates have floated the idea of suspending the federal gas tax for the so-called 'summer driving season'. So, what about the fall, winter, and spring driving seasons? Most folks who drive do so year round, not just in the designated season. Driving is not like baseball. State legislators have talked about suspending state gas taxes, but because state coffers are filled with gas taxes, nothing has come of any of the talk. Although, such action might work in the handful of states using a flat gas tax system. As gas prices rise and drivers cut back on driving, the tax remains the same and the state loses revenues.

Georgia Gov. Sonny Perdue has signed an executive order delaying implementation of a 2.9 cent/gal tax increase. In the wake of H. Katrina, Perdue stopped the entire state gas tax. So far, Georgia is the only state to take any action. However, Georgia will lose about $80 million while facing a $1 billion transportation projects deficit.

Minnesota's needs for infrastructure repair were highlighted by a bridge collapse last year that left 13 people dead. State lawmakers summoned enough votes to override a gubernatorial veto and boost the gasoline tax by 8 1/2 cents over five years.

In Connecticut, the gross receipts tax on gasoline entering the state will rise to 7.5 percent from 7 percent on July 1. That tax on wholesalers is expected to be passed along to consumers.

Florida, North Carolina and West Virginia, Kentucky and Maine are also seeing gas tax increases this year. Nebraska could see a gas tax hike as well, state officials there said.

In California, Illinois, Indiana and Michigan, the amount drivers pay in sales tax has been rising with the overall price of gas.
Here in California, we enjoy the highest gas tax in the nation (Woo-Hoo! We're #1! We're #1!) Sacramento will rake in $5 BILLION in fuel revenue enhancements this year if gas prices remained at $4.00 per gallon which would be double the $2.1 billion taken in 2003. But, it didn't. Today, gas at my local ARCO station was $4.39/gal. and is projected to be $5.00 by July 4th, the purported Independence Day. Overall however, Californian gas usage is down 2% from last year mitigating what the state can skim off the top.

California is in a red ink bath this year to the tune of $15 billion. Collecting 5 billion tax dollars from $4 gasoline is fortuitous, but $5-6 gas is even better and if it lasts long enough, might even pay the state out of debt so we can continue financing the educations and health care of all the illegal aliens. Any wonder why Sacramento doesn't want to do anything about high gas prices in a major petroleum distillation state? And with gas tax revenues of most other states rising too, they don't want to kill the liquid golden goose either.

The life of Indigo Red is full of adventure. Tune in next time for the Further Adventures of Indigo Red.


Gayle said...

California is always #1! ;)

Thank goodness Texas doesn't have a state tax, but before long it won't matter. It's only going to get worse, Indigo. I hate to sound so negative, but buckle up and get ready for it because it's going to happen. As we both know, even McCain has bought into the Global Warming BS. Have you noticed though, since so many scientists have proven the ocean waters are cooling instead of heating, that the nitwits are now calling it "climate change" so that no matter what happens they can say they were right?

Indigo Red said...

That's the beauty of stupid premonitions with self-correcting outcomes. They did the same with the ozone hole that closed all by itself 40 years ahead of predictions and all we had to do was stop using refridgerator coolant and CFC powered deoderant. The hole is now reappearing as part of it's normal cycle even though we aren't using deoderant anymore.