Maryland drivers could pay 22 cents more per gallon by 2015

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Local,Maryland,Andy Brownfield,Taxes,Metro and Traffic

ANNAPOLIS -- Marylanders can expect to pay 2 cents more per gallon of gas this summer under a plan by Gov. Martin O'Malley to fund transportation projects, but that could jump to as much as 22 cents by 2015.

O'Malley's plan arrives at that price by slowly phasing in the state's sales tax over a number of years. It also cuts the flat 23.5-cent-per-gallon gas tax by 5 cents to 18.5 cents and indexes it to inflation. An aide in the governor's office said the cut to the gas tax was meant to lessen the impact of the sales tax.

Gasoline is currently exempt from the state's 6 percent sales tax. Two percent of the sales tax would be applied to gasoline sales on July 1, leading to about a 2-cent increase in prices after the gas tax cut, given Tuesday's statewide average per-gallon price of $3.73, according to auto club AAA.

The sales tax on gas would double to 4 percent on July 1, 2014, meaning Marylanders would be paying about 9 cents more per gallon than they do today, not accounting for inflation.

The plan also relies on Congress passing a bill requiring Internet retailers to collect state sales taxes and deliver them to states. If Congress fails to pass that legislation by 2015, Maryland would apply the full 6 percent sales tax to gasoline, meaning Marylanders would pay about 22 cents more per gallon than today's prices.

The sales tax -- in conjunction with the state indexing Maryland Transit Authority bus and rail fares to inflation and the sale of transportation bonds -- would raise an estimated $3.4 billion in badly needed revenue for Maryland's Transportation Trust Fund, which is slated to go bankrupt by 2018.

Maryland has the 29th-highest total tax on gasoline at 41.9 cents per gallon, according to AAA. However, only 23.5 cents of that comes from the state's current flat gas tax, which hasn't changed since 1992.

The federal government also charges an 18.4-cent-per-gallon tax on gas sales. Maryland charges an oil transfer fee of 5.75 cents per barrel, or 0.13 cents per gallon, on companies at the wholesale level.

abrownfield@washingtonexaminer.com

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Andy Brownfield

Examiner Staff Writer
The Washington Examiner