MD Gov. Martin O'Malley's sales tax on gas is the right way to fund transport [View all]

O'Malley's sales tax on gas is the right way to fund transport
by Ben Ross • February 2, 2012 10:43 am


In his Wednesday state-of-the-state speech, Governor Martin O'Malley proposed ending the exemption of gasoline from Maryland's 6% sales tax. This is the best way for the state to get more money for transportation.

Ending the sales tax exemption, rather than increasing the gas tax beyond the current 23½¢ per gallon, accomplishes two things. First, sales tax revenue keeps pace with inflation. With the current structure of the gas tax, politically difficult tax increases are needed just to keep transit operations and road maintenance constant.

Second, we now have an opportunity to refute a widely believed myth about transportation funding. Once upon a time, drivers paid for roads through the gas tax. Most people think that's still true, but it's not.

Maryland's gas tax goes into the state's Transportation Trust Fund, along with the sales tax on car sales, fares paid on MARC trains and MTA buses, and revenues from BWI Marshall Airport and the Port of Baltimore. When the gas tax was last raised in 1992, the 23½¢ state tax was 33% of the pretax price of gasoline. The sales tax on other pur­chases was 5%. The heavy tax on gas could be described as a user fee paid by drivers. ..................(more)

The complete piece is at: http://greatergreaterwashington.org/post/13563/omalleys-sales-tax-on-gas-is-the-right-way-to-fund-transport/