States consider cutting gas taxes

OFFICIALS ARE QUICK TO SUPPORT IDEA

By Robert Tanner

ASSOCIATED PRESS

With a gallon of gas breaking $3 and voters unhappy, state leaders across the country are taking a sudden dislike to gasoline taxes, proposing to eliminate the levies that are a mainstay for road programs -- or at least halt them for the summer.

Governors have floated ideas to trim or suspend state gas taxes in Maryland, South Carolina and Connecticut. State legislators are pushing similar measures in Georgia, New York and Nevada. The proposals are winning vocal support from Republicans and Democrats alike. None has yet become law.

"We think it would have real bottom-line benefit to a lot of working families," South Carolina Gov. Mark Sanford said Wednesday. He proposed suspending the state's 16.8 cent-a-gallon tax for three months.

Critics question whether drivers would actually see the tax cut and note the potential to undermine necessary road and transportation programs along with the larger environmental impact.

Still the popularity of the idea became clear in South Carolina when the Republican governor -- unable to win support for a number of other proposed tax cuts -- quickly won bipartisan support for his proposal.

In other states:

• New York lawmakers agreed Wednesday to freeze the sales tax at 8 cents a gallon, the rate paid at $2 a gallon. Lawmakers said that would save consumers $450 million a year.

• North Carolina Gov. Mike Easley, a Democrat, said he'll include a tax-cap proposal in his budget proposal this week.

• Connecticut Gov. Jodi Rell, a Republican, threatened to call a special session on energy issues and said she is open to a legislative proposal to suspend the state's 25 cent-a-gallon tax for the summer.

• Georgia Democrats are demanding that Republican Gov. Sonny Perdue suspend the gas tax, as he did after the spike in prices that followed Hurricane Katrina.

Other states where the idea has been raised include Texas, Minnesota, Delaware and Idaho.

The gas tax is the most widespread target as constituent anger grows over gas prices, but it's not the only measure being considered.

California zeroed in on oil companies when a key legislative committee approved a windfall profits tax aimed at oil producers. Several state attorneys general have begun investigations into price-gouging, and governors in California and Maryland have asked state officials to examine potential gouging.

"We actually established a hotline and asked consumers to call," said Kentucky Attorney General Greg Stumbo, a Democrat who has sent out 43 subpoenas to petroleum companies, wholesalers and retail gasoline dealers. "As the price fluctuates rapidly, as it increases rapidly we get more calls," more than 600 so far, he said.

On average, states add 27.5 cents to each gallon of gas from a combination of excise taxes, business taxes and state and local sales taxes. It varies from a low of 8 cents in Alaska to a high of 44.5 cents in New York, according to the American Petroleum Institute.

The federal government adds 18.4 cents to each gallon.

"It's very easy to point the finger of blame at the oil companies," said Pete Sepp at the National Taxpayers Union, which supports the cuts. "But government is making a killing on these high prices, too."

In South Carolina, Sanford estimates a three-month tax suspension would save a family $63.