Area Democrats in Legislature call for pause on federal gasoline taxes through July that would save drivers 56.1 cents per gallon – Chicago Tribune
Democrats in the state legislature area continue to call for a pause on gas use and state excise taxes through July.
While lamenting the price of gas has become a common topic of conversation in offices, bars and around the kitchen table, the Hoosiers paid 74.5 cents per gallon in taxes this month. The suspension of the tax, a combination of two state taxes and the federal gasoline tax, would reduce the gasoline tax by up to 56.1 cents per gallon. That $4.75 could drop to less than $4.20 if the legislature acts.
The Indiana Department of Revenue announced last month that the state’s gasoline use tax rate in May will be 24.1 cents per gallon. The state gasoline excise tax gobbles up 32 cents per gallon and a federal gasoline tax rate of 18.4 cents per gallon, which equals 74.5 cents in taxes.
The state gasoline use tax is calculated based on 7% of the average price per tax of a gallon of gasoline in Indiana during the previous month. There is no cap on this tax rate, which means that when gasoline prices rise, the state’s gasoline use tax also rises.
The state gasoline excise tax is set at 32 cents per gallon. The previous state gasoline excise tax rate was 18 cents per gallon, but in 2017 the Republican-led Legislature approved a 10-cent gasoline excise tax hike. with an increase of 1 cent per gallon per year.
As of Wednesday, the national average for gasoline is $4.404 per gallon and the Indiana average for gasoline is $4.406 per gallon, according to the American Automobile Association.
State Representative Earl L. Harris Jr., D-East Chicago, said state leaders should take action to lower the price of gasoline.
“As a member of the House Ways and Means Committee, it’s important to me that we act in the best interests of the Hoosier families while doing so responsibly,” Harris said. “Our temporary gas tax suspension plan does just that by using our budget surplus to offset lost highway funding.”
The state budget surplus currently stands at nearly $5 billion.
State Rep. Mike Andrade, D-Munster, said it’s “unacceptable” for the state to collect gasoline taxes “while the Hoosiers are hurting right now.”
“Every time the Hoosiers pay at the pump, our state reaps revenue dollars. My fellow Republicans celebrated Indiana’s historic $5 billion surplus — so why not put it to work for the everyday Hoosiers? Either Governor Holcomb must temporarily suspend the gasoline tax, or the General Assembly must take action to do so on the day of technical corrections in a few weeks,” Andrade said.
The Legislature meets May 24 to vote to override Holcomb’s veto of a bill that would ban transgender girls from participating in women’s teams or sports.
State Representative Carolyn Jackson, D-Hammond, said the Hoosiers “deserve the opportunity to save money and put food on the table for their families.”
“Hanging the gas tax would give Hammond residents a little break from the pumps and is needed now more than ever. We have $5 billion in reserves – let’s take action to put the Hoosiers money back in their pockets,” Jackson said.
State Rep. Mike Aylesworth, R-Hebron, said he would be open to suspending parts of the state’s gas tax because the state’s “financial position is stable.” . But Aylesworth said he would not support suspending all state gas taxes because some of the gas tax funds are used for road construction projects.
“We just have to be careful not to cut road construction spending,” Aylesworth said. “We’ll see what our side of the caucus has to say the next time we visit.”
Marie Eisenstein, an associate professor of political science at Indiana University in the Northwest, said politicians are grabbing gas prices around midterm elections because voters are “voting on a pocket book. For elected officials, the “simple math” of elections is that if voters are financially secure, the political party in charge is likely to get credit and be re-elected.
“It’s something people vote on. They might not say they vote on gasoline prices specifically, but they vote on wallet issues. If things are going for them financially, they are much more inclined towards the people who are in power, the administration who is at the helm, than they are if things are not going well financially,” Eisenstein said.
Eisenstein said that over the past 10 years people have said gas prices under Democratic presidents were higher than under Republican presidents because gas prices were lower when the former President Donald Trump was in power over former President Barack Obama and now President Joe Biden. But, historically, that perception has not been voiced, she says.
High gas prices are not strictly the result of the war in Ukraine, Eisenstein said. Given the COVID-19 stimulus spending, which the Democratic and Republican presidents have issued, inflation is impacting all the goods people buy, she said.
“It’s a consequence that, ‘Look, the things that needed to be done during the pandemic maybe should have been done, but now we have to figure out how to balance them,'” Eisenstein said.
Micah Pollak, an associate professor of economics at Indiana University in the Northwest, said gas prices are determined by supply and demand and the global market. Indiana is in the minority of states that tax gasoline, with only 15 other states taxing gasoline, Pollak said, adding that now may be the time to suspend state gasoline taxes because the state has a large surplus.
“It’s a good gesture. This is something that will help the average person in Indiana, especially if you rely heavily on driving, which low-income households certainly do. They may not have the option to work from home,” Pollak said. “It’s definitely good for the average Hoosier, and there’s a surplus, so we don’t necessarily need the tax revenue so desperately.”
But, in the grand scheme of things, suspending state gasoline taxes won’t help much if gasoline prices continue to rise, Pollak said. Given inflation, the war in Ukraine and COVID-19 lockdowns in China, gasoline prices aren’t expected to drop anytime soon, Pollak said.
“It’s a nice gesture. I don’t think this will fundamentally change or solve the problem. It will ease the pain at the pump a bit, and every little bit helps…but it won’t be a long-term solution,” Pollak said.