Governor Proposes a 6% Sales Tax on Gasoline

As previously reported on Conduit Street, the Governor announced on WTOP’s “Ask The Governor” program, his support to apply the 6% sales tax to gasoline sales as a way to raise funds for transportation infrastructure.  As reported by the Washington Post:

The sales tax would be phased in annually in increments of 2 percent at the wholesale level, meaning that a gallon of gas that now costs $3.48 at the pump would increase 6 cents.

If the price of gas rises or falls, the sales tax amount would also. Combined, the three-year increase per gallon could total 18 cents or more, making Maryland’s combined levy on gasoline more than 41 cents a gallon and among the highest in the country.

When speaking on WTOP, the Governor was also asked about his support of a “lock box” to protect the Transportation Trust Fund from future transfers to the State’s General Fund.

O’Malley said he also would be open to a “lock box” measure to prevent the state from dipping into transportation funds, as it has in the past, to cover other spending.

While one of  the options the Blue Ribbon Commission on Maryland Transportation Funding considered, the Commission recommended an increase in the gas tax and other fees that are currently being paid, instead of applying the sales tax to gasoline sales.  The Commission also recommended a “lock box” to protect the Transportation Trust Fund.  As reported by MarylandReporter.com:

The top recommendation of the Blue Ribbon Commission was to create a legal prohibition requiring that money directed to the Transportation Trust Fund be spent on transportation. In past years, when the General Fund budget has run low, the Transportation Trust Fund has been used as a supplemental revenue source.

The Governor’s proposal has been receiving mixed reactions. Also reported by the Washington Post:

“The governor is walking into the biggest nightmare of working-class families,” said Senate Republican leader E.J. Pipkin (Queen Anne’s). “With this new gas tax, the citizens of Maryland will be paying premium and getting regular. . . . Add that to his other proposed tax increases, and I don’t see how Maryland is attractive to businesses — the governor’s stated goal.”

Several Democrats in the General Assembly said they wanted to wait and see O’Malley’s proposal before taking a position. House Speaker Michael E. Busch (D-Anne Arundel) said any discussion of raising the gas tax would have to come after the legislature agrees on a plan to close the state’s roughly $1 billion shortfall.

Other coverage of this issue can be found in the Gazette and the Annapolis Capital.

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