This week, House Speaker Adrienne Jones and Senate President Bill Ferguson pushed back on calls to convene a special session of the Maryland General Assembly to stop an automatic gas tax increase scheduled to take effect on July 1.
As previously reported on Conduit Street, Comptroller Peter Franchot urged Governor Larry Hogan and the Presiding Officers to convene a special session to stop the inflation-driven automatic gas tax increase of 6.6 cents per gallon.
The Maryland House Republican Caucus and Maryland Republican Senate Caucus also called for a special session to extinguish the mandated tax increase.
According to a joint statement from the Presiding Officers:
The suggested elimination of the six-cent per gallon inflation adjustment on wholesale gas purchases would not result in Marylanders seeing a price reduction at the pump but would be a loss of over $200 million in funding dedicated to ensuring the safety of our State’s roads and bridges.
Furthermore, temporary tax holidays have long-term consequences. As fuel prices rise, so too do the costs of maintenance and construction in our transportation sector. Ensuring the safety and integrity of Maryland’s roadways, bridges, and transit systems is critical. We cannot have a reliable transportation network that regularly experiences failing conditions due to insufficient funding and deferred maintenance.
We have a duty to Marylanders to protect their health, safety, and economic security, and will continue to work with others to ease the burden Marylanders are facing due to rising prices. The problem is not the marginal impact of the $0.06 inflation adjustment to the wholesale gas tax. The problem is big oil companies exploiting global uncertainty to drive the price of gas to more than $4 a gallon.
Maryland Fuel Taxes
Motor fuel tax rates are indexed for all fuels, except for aviation or turbine fuel, to the annual change in the consumer price index — which measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. Motor fuel tax rates will increase annually if the Comptroller’s Office determines that the CPI has increased over the past year.
The increase equals the percentage growth in the CPI multiplied by the motor fuel tax rates, rounded to the nearest one-tenth of one cent. Motor fuel tax rates will remain unchanged if the CPI stays flat (or decreases). Furthermore, the fuel tax increase cannot exceed eight percent of the fuel tax rate effective in the previous year.
Why Does Maryland Index Fuel Taxes?
Legislation Establishing Consumer Price Index Adjustment The Transportation Infrastructure Investment Act of 2013 (Chapter 429) substantially increased revenues available for transportation projects, primarily by increasing motor fuel taxes.
Chapter 429 altered motor fuel taxes specifically by:
- Indexing motor fuel tax rates, except for aviation and turbine fuel, to inflation beginning in fiscal 2014
- Imposing a one percent sales and use tax equivalent rate on all motor fuel, except for aviation and turbine fuel, beginning in fiscal 2014 and increasing in several steps to five percent starting in fiscal 2017
Stay tuned to Conduit Street for more information.