Maryland Legislature Approves Nearly Doubling Fuel Tax

Tom Warne Report, 8 April 2013

Land Line Magazine – April 2, 2013

A five-year, $3.4 billion transportation funding plan has been sent to Gov. Martin O’Malley for his signature, including a provision that could have drivers and truckers paying about twice as much in state fuel taxes. Voting 27-20, the Senate approved the measure, which is designed to solve the lack of funding for new highway construction after 2017. House lawmakers approved the funding plan, initiated by the governor, with a vote of 76-63. The plan will raise about $830 million annually for state and local transportation projects.

“We will support more than 57,000 jobs, ease traffic congestion and build a 21st century transportation network,” O’Malley said in a statement. He said the bill’s passage will allow the state to continue to be a competitor.

Beginning July 1, a 1 percent sales tax will be applied to fuel purchases at the wholesale level. Initially, the change will amount to a 3.8-cent-per-gallon rate increase for gas and diesel fuel. The sales tax will eventually increase to 3 percent, and then to 5 percent if Congress does not act on legislation allowing states to tax internet sales.

Additionally, the state’s 23.5-cent-per-gallon excise tax on gas and 24.25-cent tax on diesel will be tied to inflation, allowing for regular increases in the tax rate. unchanged since 1992. When the taxes are fully implemented in 2017, the state estimates that the price at the pump would be about 40 cents per gallon.

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