As gasoline prices climb rapidly past $3.30 a gallon, the Legislature is considering a change in the state’s gas taxes that could well push the price even higher.
The change, part of a sweeping proposal to overhaul the state’s taxation system, would address a huge problem in Georgia transportation funding: Much of the state’s gas tax does not rise with inflation. Under the bill introduced last week, that would change.
The complex proposal does have a possible upside for drivers’ pocketbooks, sort of. If the price of gas went really high, although the total revamped gas tax may still go up, it could go up less than if legislators make no change.
To understand the proposed change, it’s important to understand how the state’s gas tax works now. Part of the tax — right now, about half — is assessed as a per-gallon charge that changes according to the price of gas. That means it’s highly volatile: If the price of gas skyrockets, so does the tax. The state Revenue Department sets the tax about twice a year.
The other half of the tax is also a per-gallon charge, but it never changes. Set in 1971 at 7.5 cents per gallon, it still brings in 7.5 cents per gallon. That yielded 75 cents for the state from a 10-gallon tank of gas 40 years ago, and 75 cents today.
Under the new proposals, both parts of the gas tax would be pegged to the cost of road construction (nearly all of the gas tax, by law, is dedicated to road-building.) So consumers would be paying a per-gallon charge based on a once-a-year reckoning by the state of the cost of road-building.
The last decade included ups and downs both in the price of gas and in the price of highway construction. During the mid-2000s building boom, the price of construction materials increased. As oil prices rose, the price of asphalt tar soared.
The gas tax revision is part of a larger proposal to change the state’s tax structure. The Special Council on Tax Reform and Fairness for Georgians studied Georgia’s taxes for months before making its proposal to the Legislature. The bill filed last week, HB 385, embodies all the proposals the council offered, although it gives the revenue commissioner some leeway in setting the tax rate.
According to council member David Sjoquist, if the new proposals had been in place since 2000, the state gas tax would now be about 6 cents per gallon higher, a 40 percent increase. That means a 15-gallon tank of gas would cost 90 cents more than it does now.
For state road projects a 40 percent increase could be a bonanza on the order of $300 million extra a year. The more time that went by with the inflation trends continuing, the more the increase would be, Sjoquist said. And that would address a problem for road construction. As highway construction costs increase, and people drive more fuel-efficient cars, the gas tax has become weaker and weaker at funding projects.
It remains to be seen whether the proposal would fly with taxpayers -- or with legislators.
“I’d be in favor,” said Brett Alberty of Marietta, a fifth grade teacher who commutes on I-75 and I-285. “It’s always a tough sell to increase taxes. But as long as that money is definitely going towards roads, absolutely. It’s a small enough amount. People would still make a fuss about it but I don’t think you’re really going to notice it.”
Speak for yourself, others say.
“I really don’t want to pay more than what I’m paying now,” especially considering the rising price of gas, said Marc Cain, 36, of Conyers. “It comes off as 5 cents but that adds up over everyday travel.”
Indexing the gas tax to the cost of road-building apparently would keep the revenue in line with the costs of projects it is supposed to fund. But that was not the council’s goal, nor was it intended to raise more revenue, insisted Sjoquist. The point is, he said, it would also be more stable, enduring fewer of the convulsions that gas prices do.
If the proposal does represent a gas tax hike, no one is eager to portray it that way.
At the DOT’s public board meeting last month, some board members bemoaned the recommendation as inadequate to keep up with road needs.
“This is not an increase of any tax, it’s a decrease really?” asked board member Johnny Floyd.
“It’s a very, very delicate subject,” state Transportation Board Chairman Rudy Bowen said in an interview Monday. But Georgia’s road needs are bearing down, he said.
“Lets’ face facts,” Bowen said. “Florida and North Carolina are doing heavy investment in transportation and we’re sandwiched in the middle. What are we going to do in Georgia to invest in transportation for economic development?”
Georgians may well face a choice if they want transportation projects, he said: taxes or tolls.
House Ways and Means Committee Chairman Mickey Channel, a sponsor of the tax overhaul bill, said he wouldn’t rule out the recommendation, even if it raised taxes over time.
“Either way it’s based on trying to figure out what the future holds and I’m not too good at that,” said Channel, R-Greensboro.
A member of his committee, Rep. Larry O’Neal, R-Bonaire, also a ponsor, said it had better not, unless that was offset by lowering income taxes or some other tax in the state code.
“That may be the way the council’s looking at ‘revenue neutral’ but that’s not the way this deliberative body is looking at revenue neutral,” he said.
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