Pennsylvania may suspend fuel tax; restrictions on fuel haulers eased

| 9/9/2005

Responding to pressure from Pennsylvania residents about rising fuel costs, Gov. Ed Rendell said last week he may ask state lawmakers to temporarily lift the state’s per-gallon fuel tax.

In the meantime, The Pennsylvania Department of Transportation has temporarily waived regulations that prohibit commercial haulers that transport diesel fuel and gasoline from operating more than 11 hours per day. Rendell requested the waiver.

The waiver, which remains in effect until Sept. 14, only applies to intrastate truckers.

Rendell said he is also keeping a close eye on what drivers are paying to fuel up.

“We are monitoring what happens to prices. If you ask me today, ‘Do I think that the price increase justifies that?’ The answer is no, but we are going to monitor prices and see where it goes,” Rendell told the Philadelphia Enquirer.

Lifting the tax on fuel would require legislative approval. The General Assembly is not scheduled to return to the capitol until the end of September. Such action would not include sales taxes on fuel.

The governor said if he decided to pursue a tax holiday, he could call a special session at anytime to tackle the fuel tax question.

A loss of tax revenue wouldn’t come without a cost, Rendell said.

“There’s a price that we pay if we do that,” Rendell told news reporters Sept. 1 at a Harrisburg service station. He said it would “take a big hunk” out of the $2 billion the tax generates each year for road and bridgework throughout the state.

However, Pennsylvania wouldn’t be doing truckers any real favors by not collecting the fuel tax. Truckers would still be required to report and pay for their International Fuel Tax Agreement miles in the state.

Simply put: If a fuel tax holiday is granted, truckers who buy fuel in Pennsylvania won’t be paying for the tax on the front end, but they would have to pay for it later through IFTA quarterly filings. And that goes for any state that doesn’t waive IFTA miles.

“As more states are looking closely at the possibility of fuel tax holidays, truckers need to be aware that the savings they may realize at the pump could be short-lived,” Todd Spencer, executive vice president of OOIDA, said.

“Even though you don’t pay the tax on the front end, if you’re running through states that have not waived it, you could wind up owing a sizeable chunk on your quarterly reports.”

Rendell said he is also closely watching for reports of price gouging and whether a fuel shortage is approaching.

If supply is restricted enough, the governor said he could enact a “fuel emergency” in the state. Declaring a fuel emergency would give him the authority to prosecute price gougers, rollback prices and institute certain rationing efforts, the Enquirer reported.

Pennsylvania isn’t alone in its pursuit of combating higher prices at the pump brought on by Hurricane Katrina.

Georgia Gov. Sonny Perdue has issued a month-long moratorium on the state’s 7.5-cent-per-gallon tax on gasoline and diesel fuel. Unlike proposals in other states, the order also includes a suspension of the state’s 4 percent sales tax on fuel until the end of September. The tax breaks will cost the state about $75 million in tax revenue.

Other states considering fuel cost relief actions include:

  • Wisconsin Republicans are pushing a plan to give residents a fuel tax holiday for the rest of the year. Instead, Democratic Gov. Jim Doyle wants to repeal the state’s minimum markup requirement for diesel and gasoline.
  • Effective Sept. 1, a new Hawaii law limits the wholesale price of gasoline, making it the first state in the nation to limit prices.
  • A New Jersey lawmaker is considering legislation that would mimic Hawaii’s price cap – and include diesel fuel.
  • Democrats in the Missouri House want Gov. Matt Blunt to expand the agenda of the special session that started Tuesday, Sept. 6, to include a two-week fuel tax holiday that would cut the state’s 17-cent-a-gallon tax on diesel and gasoline to 7 cents a gallon. The Republican governor’s office has called the plan a “risky scheme.”

– By Keith Goble, state legislative editor
Land Line staff editor Jami Jones contributed to this report.