Law sparks N.C.
gasoline tax rise Increase in
wholesale fuel price allows for biggest boost in 15
years By Dianne
Whitacre Knight
Ridder
North Carolina's gasoline tax quietly increased 2 cents a gallon
this month because of a longtime state law that allows an increase
if wholesale fuel prices go up.
The tax changes usually are a fraction of a penny, and the 2-cent
raise is the largest increase in about 15 years.
The higher tax rate, which took effect Jan. 1, follows higher
wholesale prices last year. On Oct. 30, N.C. drivers paid a record
average of $1.97 a gallon for regular gasoline. The current
Charlotte, N.C., average is $1.82, according to AAA Carolinas.
Gasoline prices are up 11 cents since Jan. 1. Cold winter weather
has driven up the price of crude oil and with it the price of
gasoline, industry analysts say.
Drivers such as Stuart Andersen of east Charlotte say they are
sorry to see bigger numbers at the pump. He was pumping
$1.83-a-gallon gasoline Friday.
"I was just liking the lower prices, and now they're heading up
again," Andersen said.
The N.C. gasoline tax now is 26.6 cents a gallon, about a penny
more than the national average. South Carolina's state gasoline tax
is 16 cents a gallon.
Drivers also pay a federal tax of 18.4 cents a gallon.
North Carolina, Wisconsin and Kentucky are the only states with a
variable gasoline tax. About two-thirds of the N.C. tax is fixed;
the other third goes up and down with the wholesale price.
Wholesalers supply fuel to retail stations.
The wholesale portion of the gasoline tax is calculated every six
months. It has risen 16 times and dropped 13 times since the law was
amended in 1989, according to the N.C. Department of Revenue.
If wholesale prices hold steady, a year's collection from the
extra 2 cents will provide the state $110 million in a full year,
said Mark Foster, chief financial officer for the N.C. Department of
Transportation.
The state collects $1.4 billion in gasoline tax annually.
The gasoline tax is used mostly to build and maintain state
roads, but a portion goes to the general fund, including money for
the N.C. Highway Patrol, high school driver's training and
transit.
"It won't make a dent in how much construction costs have gone up
in the past few years," Foster said.
Road construction prices are up more than 7 percent annually,
largely because of the hot global market for steel and cement. The
higher taxes will bring in less than 4 percent more money, Foster
said.
North Carolina is responsible for more than 78,000 miles of
roads, the nation's second largest state-maintained network, after
Texas. Most states rely on counties to build and maintain secondary
roads, but North Carolina takes care of those lesser traveled roads
as well as primary roads, highways and freeways.
Drivers probably would be more accepting of the higher gasoline
tax if all of it went to improving roads, said John Hood, president
of the John Locke Foundation, a public-policy think tank based in
Raleigh, N.C.
Drivers are taxed by the gallon, not by the miles they drive.
"We are driving more miles on the same tank of gas," Hood said.
"In the world of increasing fuel efficiency, it is difficult to keep
up with road needs."
The American Petroleum Institute says the price of gasoline has
risen about 44 percent in the past 20 years, and the Consumer Price
Index has risen 86
percent. |