N.C. Senate Republicans’ gas tax cut—which is not really a tax cut—is heading to the state House.
The chamber gave its approval today of Senate Bill 20, controversial legislation that would offer a short-term decrease in the state’s fuel tax before raising the levy in the coming years.
Senate leadership described the bill, sponsored by Republicans Bill Rabon, Bob Rucho and Jerry Tillman, as a means of stabilizing the state’s fuel tax key to funding the N.C. Department of Transportation.
On March 1, the bill would lower the state gas tax from 37.5 cents per gallon to 35 cents per gallon.
But, based on the state’s plummeting fuel prices in recent months, North Carolina’s fuel tax would have dropped to around 30 cents in July based on the current formula. S.B. 20, however, will freeze the minimum tax at 35 cents, ensuring consumers will not see that cost-saving.
The legislation would also change the way the fuel tax is calculated. Current law dictates that the levy be set at 7 percent of the average wholesale gas price, but the GOP’s proposal would increase that number to 9.9 percent.
Either way, both conservative and liberal groups say Senate Republicans are foisting a tax hike on state residents hidden by a short-term tax cut.
“Lawmakers think they can fool voters by passing a tiny short-term cut which hides a massive long-term increase,” said Gerrick Brenner, executive director of left-leaning Progress North Carolina Action. “Governing through bait-and-switch tax schemes is no way to run a state, and North Carolinians deserve better from their leaders.”
Over the next four years, legislative staff estimate that the tax changes would generate $1.2 billion for the state’s myriad transportation needs. But, in the short term, the temporary tax cut will cost the state about $33 million, setting back road maintenance and forcing DOT to shed 550 full-time positions.
Senate Democratic Leader Dan Blue Jr. of Wake County said he hopes to see changes forthcoming in the legislation in the state House.
“This bill is a $1.2 billion tax increase over the next four years that will put the burden of funding our transportation shortfalls on the backs of the middle class families that can least afford it,” Blue said.