Indiana lawmaker calls for gas sales tax repeal

| 8/7/2006

The leading Democratic lawmaker in the Indiana House is calling for the governor to temporarily suspend the state sales tax on gasoline. Any possible breaks for diesel purchases are less clear.

House Minority Leader Pat Bauer, D-South Bend, also said Aug. 2 that Democrats will push for a permanent repeal of the gas sales tax when the Legislature convenes in January. The proposal would not affect the state's per-gallon fuel tax, which funds road work.

Clint McKay, Bauer's chief of staff, said the lawmaker could decide to include the sales tax on diesel in his call for relief.

“He hasn't really thought about whether he was going to include diesel in his call or not. But he's definitely thinking about that,” McKay told Land Line .

Bauer said rising gas prices since Gov. Mitch Daniels took office in January 2005 has netted the state $156 million more in gas sales taxes than the state would have received had prices remained the same.

“Oil companies are getting rich, and the state's coffers are overflowing with profit from that profit,” Bauer said at a press conference in Indianapolis. “It's time to give back.”

Daniels isn't too keen about suspending the state's 6 percent sales tax on gasoline. The Republican governor told WNDU-TV in South Bend, IN, that while he would never say never to suspending the tax, now is not the time.

But House Speaker Brian Bosma, R-Indianapolis, said the proposal was “fiscally irresponsible” because it would cost the state as much as $400 million. He also called Bauer's suggestion “political pandering.”

Bosma also said eliminating the tax would work against Republican efforts to balance the state budget.

McKay disputed that claim.

“Sales tax is sales tax. If you were to rid yourself of the sales tax on gasoline that would give people more disposable income, which in turn they would spend elsewhere and we wouldn't lose any money. The state wouldn't lose very much money at all. It might actually stimulate the economy,” he said.

– By Keith Goble, state legislative editor