MBRG: It's Hurry Up And Wait On The Gas Tax

Towson, MD - Following the O'Malley Administration's decision to delay introducing the fuel tax bill, Maryland Business for Responsive Government noted today that sales taxes - as applied to other consumer purchases including gasoline - are nothing more than another revenue source to support general fund spending.

The Governor proposes phasing in a 6% sales tax in 2% increments over a three-year period to fuel. Now it appears that plan, as the Governor outlined in recent weeks during media interviews and in the state-of-the state address, are under review. In remarks to WBAL radio yesterday evening, the Governor said that although he has signed off on the legislation, there nevertheless "was some delay in presenting the bill to stakeholders and legislative leaders."
http://www.wbal.com/article/86631/2/template-story/OMalley-Signs-Off-On-Gas-Tax-Bill
"It's hurry up and wait," said Maryland Business for Responsive Government President Kimberly M. Burns. "People are not going to fall for a fuel tax that will not work as advertised.

While there is plenty of talk about the need to invest in infrastructure, there is still no plan in place to ensure adequate transportation investments."

The existing sales tax is Maryland's second-largest general fund revenue source after the individual income tax. With estimated annual revenues of $613 million, enacting Governor O'Malley's proposal of imposing the sales tax to fuel would increase the sales tax by 17%, overall, as a general fund revenue component. While that would enable state spending, the unanswered question is how to ensure adequate transportation funding.

Short of a constitutional amendment, the effectiveness of which itself is debatable, there is no permanent solution to protecting future fund raids, which in recent years has had nearly $1 billion siphoned from it for unintended purposes.

"What got us into this problem in the first place are these irresponsible fund raids," said Burns. "Now that the bills are due, suddenly there is this mad scramble for new revenue in the form of an urgent tax increase. This is too expensive of a burden on consumers and businesses, and we urge the Administration to use this time wisely to re-evaluate where they are going and how they plan to get there.”