With the Fed slowly losing the war of attrition with Saudi Arabia, leading to the recent fade in the dead cat bounce of oil prices witnessed earlier today when oil dropped to the lowest level in 10 weeks [5], some states have decided that since the shale crisis will continue indefinitely and that gas prices will remain "lower for longer", there is no point in letting yet another crisis go to waste and have decided to promptly take advantage of what may have been a brief boon to consumers by minimizing the "oil crash" windfall and imposing additional gas taxes.
According to the Citizens for Tax Justice and the Institute on Taxation and Economic Policy (ITEP), starting today, six states will increase their gas taxes to help pay for transportation projects.
Beginning July 1, drivers in Idaho, Georgia, Maryland, Rhode Island, Nebraska and Vermont will be charged more at the pump as a result of laws taking effect at the start states' new fiscal year.
There is some good news: a seventh state, California, is decreasing its gas tax by 6 cents, according to the group.
Then again, after putting the California gas price in context with the rest of the US even after the recent gas price drop...
[6]
... the "good news" for California is hardly all that good.
Now back to the bad news for residents in the six states named above, soon spreading to residents of many more states which are sure to take advantage of these low, low gas prices and layer "just a little extra" tax on them.
From The Hill: [7]
ITEP Research Director Carl Davis said Monday in a blog post that the states are increasing their gas taxes by a range of 0.35 cents to 7 cents per gallon in an effort to replace federal transportation funding that has largely dried up in recent years.
"While some drivers may view this as an unwelcome development during the busy summer travel season, the reality is that most of these 'increases' are simply playing catch-up with inflation after years (or even decades) without an update to the gas tax rate," Davis wrote.
"Moreover, these increases will fund infrastructure improvements that directly benefit drivers and other travelers — an especially important step at a time when Congress’ commitment to adequately funding infrastructure remains highly uncertain," he continued.
The largest gas tax hike of the bunch is a 7-cent-per-gallon increase that is scheduled to take effect in Idaho, according to the tax watch groups.
Here is the breakdown:
- Drivers in Georgia will face the second-largest tax hike of the week, when their prices at the pump go up by 6.7 cents per gallon
- Maryland is poised to implement a 1.8-cent-per-gallon increase
- Rhode Island is raising fuel levies by 1 cent per gallon
- Nebraska and Vermont have the smallest gas tax increases, scheduled at 0.5 cents and 0.35 cents per gallon, respectively
That's not all: "The additional money will be collected on top of an 18.4-cent-per-gallon federal gas tax charged to all drivers in the U.S. to fill the federal government’s transportation funding coffers.
Lawmakers in Washington face a July 31 deadline to pass federal transportation funding before it expires, and they are struggling to come up with a way to pay for an extension.
Transportation advocates in Washington have pointed to states' willingness to raise their gas taxes as evidence that a hike in the national gas tax hike would be politically palatable.
Conservative groups in Washington have made clear they would consider an increase in the federal fuel levy a tax hike, however.
The Hill also notes that the federal gas tax has been the main source of transportation funding for decades, but it has not been increased since 1993, and more fuel-efficient cars have sapped its buying power. While the tax hike has backing from business associations and unions, opposition from conservative groups, such as Heritage Action and the Club for Growth, led GOP leaders in the House to call it a nonstarter.
Ironically, the longer the price of oil remains low, the easier it will be for both the Federal and various State governments to layer taxes on top of the underlying price to he point where whatever "tax savings" may have emerged in the past year will be promptly externalized by various bureaucracies who have decided that too much fo a cheap thing is not good for a consumer, especially a consumer who instead of spending the "gas tax hike" decided to save it, which in the new normal is borderlin illegal.
