The Journal Gazette
Sunday, May 22, 2022 1:00 am


Gas-tax relief small sacrifice to state budget

EDITORIAL BOARD | The Journal Gazette

Ronald Julian stopped for fuel and a drink at the Lassus station at 5545 Stellhorn Road Friday morning, where the price of a regular gallon of gasoline was $4.59.

“What I think about is people making the minimum wage,” Julian said. “The paycheck, (it's) gone on the gas.”

Indiana's average price for regular gas hit $4.62 a gallon Thursday, up from $3.93 just one month earlier, according to the American Automobile Association. The inflation rate in April slowed to 8.3% from a 41-year high of 8.5% in March, according to the U.S. Bureau of Labor Statistics, though it's unlikely to fall to pre-pandemic levels anytime soon.

Within the past week, Democrats have called for Indiana Gov. Eric Holcomb to issue an emergency order suspending the state gas tax, or for the Republican-led General Assembly to cut gas taxes when legislators hold a one-day meeting this week. Lawmakers are expected to vote Tuesday to override the governor's veto of a ban on transgender high school athletes.

Julian sides with the Democrats. “It's too much. I mean, everything is up,” he said. “Look at the price. Some people (are) not making enough money to pay for them guys' back-and-forth. It's not fair.”

A temporary suspension of the sales tax on gasoline certainly would benefit all Hoosiers – Democrat and Republican, rich and poor.

Hoosier motorists pay three taxes on a gallon of gas: an excise tax of 32 cents per gallon that pays for road projects, an annual 1 cent per gallon inflation adjustment, and a separate gas sales tax. Drivers in Indiana currently are paying about 56 cents per gallon in state gas taxes – the highest-ever level in history, the Associated Press reports.

That tax will barely change in June. An Indiana Department of Revenue calculation announced Thursday revealed the state's sales tax will be 24 cents per gallon. The rate currently charged is 24.1 cents a gallon.

Combined with federal gas taxes, motorists in Indiana will be paying about 74 cents per gallon in taxes every time they stop for a fill-up next month.

“Anytime that there is an automatic increase of a tax that's going on, it certainly (should be) voted on every year,” state Rep. Justin Moed, D-Indianapolis, told Indiana Public Media Tuesday. “I don't think that we should have tax increases that happen just because.”

Holcomb said he doesn't have the authority to temporarily waive the state's gas tax.

Despite the pandemic, state tax collections have surged in recent months, reaching $1.8 billion, or nearly 12% more than a year ago. That could deepen state cash reserves from the record $3.9 billion of last year, the AP reported, to about $6 billion when the budget year ends June 30.

“A windfall of excess funding has left Indiana in a position to provide real relief without sacrificing funding to important roads and construction projects,” state Rep. Tonya Pfaff, D-Terre Haute, told the AP. “The time to act is now.”

The current situation concerning gas taxes, however, suggests a looming problem, the Tax Foundation warns. These taxes face a narrowing base, with higher demand for better fuel economy and the sales of electric-powered vehicles. Indiana will need a new, fairer way to pay for road improvements, and a suspension of the 32-cent excise tax on gas doesn't get us closer to solving the approaching headache.

But temporarily waiving the 24-cent sales tax on gasoline wouldn't break the bank. State Rep. Greg Porter, D-Indianapolis, the highest-ranking Democrat on the House Ways and Means Committee, told the AP Indiana has more than enough money available for gas-tax relief.

The General Assembly doesn't need a record $6 billion budget surplus while Hoosiers struggle to pay increasing costs for food, clothing, shelter and gasoline.

Share this article

Email story

Subscribe to our newsletters

* indicates required