Maryland Sales Tax Legislation Imposes Tax on Gas
- Fuel Tax News
- Feb 15, 2012 | Susan McLain
Maryland Governor Martin O’Malley has introduced legislation “…to phase in a 6 percent sales tax on gasoline [that] includes money for local road repairs, rules to make it harder to shift transportation dollars to other purposes and a mechanism to delay implementing the tax if gas prices spike.”
According to the Governor’s office press release, “Over the course of these recessionary times, local revenue funds have been reduced; this legislation restores transportation aid to local governments. When fully-phased in and combined with Highway User Revenues, the revenue generated from the application of the sales tax will restore both municipalities and Baltimore City to approximately 71 percent of their 2008 funding levels and will restore the Counties to nearly half (42 percent) of their 2008 funding level.”
How it will work
Each year, a two percent rate will be added to the base”… retail price of motor fuel minus any federal and state taxes.” This increase is expected to “…generate an additional $613 million in revenue to address Maryland’s urgent transportation infrastructure needs and support an estimated 7,500 jobs for Maryland families.”
What if gas prices shoot up?
In order to prevent undue burden, the legislation “…includes a ‘braking mechanism’ that will temporarily cease the phasing of the tax for consumers in the event of a dramatic spike in the price of gasoline.” For example, “If the price of gasoline in year one were to increase by more than 15 percent over the prior year, the rate in year two would remain at 2 percent. This test will be calculated in each subsequent year until the full rate of 6 percent can be applied.”
The Governor’s website reports that the average daily commute for Marylanders is 32 minutes and that Maryland’s two metropolitan regions are #2 and #6 in the top six worst traffic congested areas in the nation. Maryland’s infrastructure has been supported by a 23.5 cent gas tax that has been in existence since 1992 with no increase.