Gas Tax Hikes on the Horizon

January 7, 2009

Large gas tax hikes may be on the horizon – especially if gas prices stay as low as they have been over the last several months. Democrats are staring at a $1.2 trillion budget deficit and need to money somewhere to attempt to reduce the deficit.

The National Commission on Surface Transportation Infrastructure Financing is proposing that Congress raise the gas tax an additional 10 cents a gallon and the diesel-fuel tax 12 to 15 cents a gallon. This translated into tax increases in excess of 50% of the current amounts paid. Currently, Federal gas and diesel taxes are 18.4 and 24.4 cents per gallon, respectively. All of these taxes are on top of the taxes levied by individual states which range from 8 cents (Idaho) to 36 cents (Washington). Rates for North Carolina and South Carolina are 30.15 cents and 16 cents, respectively. Click here for more Motor Fuel Excise Tax Rates.

In addition, the commission is pushing to tie the rate increases to inflation so that they will automatically increase instead of having to be voted on and approved.

Opponents of the gas tax argue that it unfairly taxes lower income families – since virtually everyone buys gas. My guess is that many of these families have incomes lower than the $250,000 threshold in which President-Elect Obama promised no tax increase. Of course, his argument will be that he was talking about income taxes. Bottom line, a tax increase is a tax increase and they will raise the money anyway they can. They have to pay for all of these bailouts and new government programs somehow.