North CarolinA bill would trim fuel tax

| 6/25/2008

If a North Carolina state lawmaker gets his way, motorists and truck drivers would get some relief at the fuel pump. Other states have approved similar fuel cost savings rules.

Rep. Cary Allred, R-Burlington, has introduced a bill that would eliminate a portion of North Carolina’s 29.9-cent-per-gallon tax on fuel purchases. The tax is composed of a 17.5-cent flat rate and a 12.4-cent wholesale component.

Allred said he is pushing to eliminate the wholesale portion because North Carolina’s fuel tax is higher than neighboring states. He also said that every time the price of fuel increases, the state gets a “windfall” in tax money.

Critics of the plan say that reducing the tax would eat into revenues that pay for road work. Others say there is no guarantee that a tax reduction would trickle down to the pump.

The bill – HB2587 – is in the House Finance Committee.

Efforts in other states
Governors in Georgia and Connecticut recently adopted their own fuel relief efforts.

In Georgia, Gov. Sonny Perdue signed an executive order to suspend a scheduled increase in the state’s tax collected on fuel purchases that was due to take effect July 1.

Georgia law requires the state’s Department of Revenue to recalculate the state excise tax and sales tax on motor fuels every six months to adjust for changes in prices. The excise tax is 7.5 cents per gallon with the sales tax charged on top of that.

Perdue said in a written statement that not only will suspending the tax hike benefit drivers, but “suspending these tax increases will benefit some of our most important industries.”

Connecticut Gov. M. Jodi Rell recently signed a bill into law to give consumers a break from high fuel prices. The new law stops a scheduled fuel tax hike. It also allows more fuel stations to offer cash discounts.

Advocates for the change say the discounts could save consumers between 10 cents and 20 cents per gallon in a state where a gallon of diesel is averaging $4.90.

Discontent from consumers led lawmakers to scrap the scheduled July 1 increase in the state’s tax on wholesale earnings from fuel sales. The tax was slated to increase from 7 percent to 7.5 percent.

Rell said the new law will be beneficial to consumers but still more needs to be done.

– By Keith Goble, state legislative editor