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Maryland Gov. Fuel Tax Plan Similar to Virginia's

March 6, 2013

By Evan Lockridge

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Maryland Gov. Martin O’Malley has borrowed a page from Virginia Gov. Bob McDonnell’s playbook, with proposed changes to the state’s tax on gasoline to raise highway funds. According to published reports there is no indication that it would affect the diesel fuel tax.

O’Malley is pushing for cutting 5 cents off the state’s current 23.5 cents a gallon gasoline tax and creating a new wholesale tax of 4%. It would be phased in with the tax rising with inflation. It’s estimated this would translate into a 2 cents increase on July 1 and another hike of 7 cents a year later. It would also increase by an additional 2% or about 7 cents in 2015, unless Congress passes legislation allowing sales tax collections on Internet purchases. The money would go for highways, but not exclusively.

The plan has the backing of both the Maryland House and Senate leaders, including Senate president Thomas V. Mike Miller Jr., who had earlier proposed increasing both the diesel and gasoline taxes.

Supporters say this latest plan is needed to pay for road and transit projects that will run out of money unless there is additional revenue. Opponents say it will place an extra financial burden on the public and tilts more in favor of transit projects than money for roadways. Last year O’Malley offered up a plan increasing the gasoline sales tax by 6% but it died.

The plan has some similarities to legislation recently negotiated legislation passed in Virginia that its governor is expected to sign. It replaces the current 17.5 cent gas and diesel tax with a 3.5% wholesale tax on gas and a 6% wholesale tax on diesel. The current 5% retail sales tax will go up to 5.3%, with a fixed portion going to transportation.

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