This week State Rep. DebraLee Hovey (R-112) called for the immediate adoption of a proposal that would place a temporary cap one of the state’s two taxes on gasoline, and said the General Assembly should then take steps toward making a cap of the hidden “gross receipts” tax permanent.
Over the past six years Hovey and her Republican colleagues have tried repeatedly to give residents relief at fuel pumps by proposing the cap, only to see majority party legislators reject or ignore those efforts no fewer than seventeen times since May of 2007. This week, however, legislative Democrats embraced the concept by proposing a year-long cap, which is a good start said Hovey.
The per-gallon tax total paid at the pump represents three separate taxes. The federal tax— 18.4 cents, the fixed 25-cent state tax and the gross receipts tax levied as a percentage of the wholesale price combine for our total gas tax burden. The gross receipts tax rate is 7.53 percent, costing consumers roughly 23 cents per gallon—a figure that increases every time the price of gas rises. This provides a windfall to the state each time the price of gasoline spikes, increasing the pain to consumers.
“I’ve spent a number of years calling for relief of the gas tax only to have the majority oppose it at every turn,” said Rep. Hovey. “I welcome their change of heart on this important issue. We can’t control the fluctuating price of oil, and we can’t even control the federal taxes on gasoline, but on the state level we can most certainly control the excessive taxes we collect. High fuel costs slow the economy, and hurt the working families of this state, and we should be looking to reduce that burden permanently.”
The proposal on the table would cap the wholesale price of gasoline at $3 a gallon and Hovey is urging his colleagues on the other side of the aisle to help push the temporary cap through the legislature immediately and onto the governor’s desk for approval. The measure could be acted on as early as next Wednesday, March 28th.
Hovey noted that working toward a permanent cap is essential because the temporary cap from majority legislators would expire in 2013 as an increase to the gross receipts tax is scheduled to kick-in.