Gas Tax Would be Passed on to Motorists, Economist Says

By Eric Boehm | PA Independent

HARRISBURG – Economists say that corporations don’t pay taxes, people do.

And that’s more-or-less the message from Rayola Dougher, an economist with the American Petroleum Institute, a research and lobbying organization for the gas and oil industries.  Dougher told the Wilkes-Barre Citizens’ Voice on Friday that Gov. Tom Corbett’s proposal to uncap a portion of Pennsylvania’s gasoline tax in order to generate up to $1.8 billion annually for road and bridge repairs could lead to Pennsylvania having the highest taxes in the nation and that motorists would be paying for it.

Here’s what the paper had to say:

“As levied now, the tax is about 9 percent of the price of a gallon of gas, but calculated on a maximum price of $1.25 per gallon, yielding about 20.3 cents. By gradually lifting that cap over time to reflect actual gas prices – already more than double the cap – the amount of the tax paid per gallon could more than double….

…With the cap on the other tax fully lifted, Pennsylvania would become home to the most highly taxed gasoline in the nation, with a total of 75.2 cents of taxes on each gallon.

Under a current state-by-state comparison compiled by the American Petroleum Institute, the most taxed gasoline is sold in New York, at 69 cents per gallon. The national average, according the API, is about 49 cents.”

In his budget address, Corbett described the uncapping of the oil franchise tax as “not a new tax” and pointed out that he is not calling for an increase in the tax rate – only that it be applied to the full price of gas instead of only the first $1.25 per gallon.

“I am simply saying the time has come to apply it to the full value of what the company is selling. It is time for oil and gas companies to pay their fair share of the cost of the infrastructure supporting their industry,” Corbett said.

But contrary to Corbett’s claim, Dougher said lifting the oil franchise tax would result in those higher costs being passed down to the consumer, like other taxes are.

The increase in the oil franchise tax is supposed to generate about $1.8 billion annually once the cap is fully lifted.  Already, lawmakers on both sides of the aisle have indicated they would like to see a final revenue package that has a larger bottom line.

State Sen. John Rafferty, R-Montgomery, said Wednesday he wants to look at increasing the costs for vehicle registration fees, drivers’ license fees and moving violation fines.

Those proposals were included in a report commissioned by Corbett in 2011 to study transportation funding options.  The committee that prepared the report recommended $3.5 billion in new annual revenues to fund transportation.

It seems, no matter what the solution, motorists will be paying more.

Contact Boehm at Eric@PAIndependent.com and follow @PAIndependent on Twitter for more.