How Maryland's new tax on gas would work

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Local,Maryland,Andy Brownfield,Taxes

When consumers buy crab cakes in Maryland, they pay the state's 6 percent sales tax. That means a $10 crab cake sandwich is taxed 60 cents.

But the sales tax on gasoline that Maryland Gov. Martin O'Malley is proposing under his transportation funding plan wouldn't work that way.

The proposal cuts Maryland's flat 23.5 cents-per-gallon gas tax by 5 cents to 18.5 cents and gradually applies a wholesale tax to gas, starting at 2 percent this July, doubling to 4 percent in July 2014 and jumping to 6 percent in 2015 if Congress fails to pass a law requiring Internet retailers to start collecting sales tax.

The Maryland comptroller would determine the average retail price of gas for the past 12 months beginning with the start of a new fiscal year each July, then apply the sales tax to that. The resulting amount would be added to the per-gallon gas tax, which would be 18.5 cents in July but would be adjusted for inflation at the beginning of every fiscal year.

That means with a 12-month average cost per gallon of $3.59, Maryland would add an extra 7 cents to the 18.5-cents-per-gallon gas tax in July. That would total 25.5 cents, or 2 cents more than Marylanders currently pay per gallon.

Given the same price and discounting inflation, Marylanders would be paying 9 cents more per gallon in fiscal 2015 and 19 cents more in fiscal 2016.

abrownfield@washingtonexaminer.com

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