State officials seek motor fuel sales tax of 5% New levy on gasoline is proposed by DOT

January 05, 1991|By Doug Birch

Department of Transportation officials plan to recommend Monday that the state impose a new 5 percent sales tax on motor fuel along with increases in motor vehicle and truck fees, state government sources confirmed yesterday.

If it were imposed today, the sales tax would add almost 7 cents to the average cost of a gallon of gasoline in Maryland, sending the price from $1.33 to almost $1.40.

The proposed new tax would be in addition to the state's 18.5-cents-per-gallon flat tax on gasoline and other motor fuels. It would be imposed at the pump and calculated based on the total purchase price, including the current flat per-gallon state and federal taxes, officials confirmed privately.

The DOT will present the plan to the governor's Transportation Revenue Committee Monday in Annapolis.

If the committee endorses a new motor vehicle tax package and the governor embraces it, the plan must still go to the General Assembly for approval.

Transportation officials hope that the package will raise as much $1.5 billion over the next five years to head off budget deficits caused by dwindling revenues, accelerate maintenance programs and build some new roads, bridges and transit projects.

At least seven other states currently impose a similar gasoline sales tax, according to the DOT.

When William K. Hellmann, chairman of the transportation revenue panel, and DOT officials talked to panel members this week, they presented a plan for a dual tax increase -- a 3-cent increase in the 18.5-cents-per-gallon state gasoline tax in addition to the 5 percent motor fuel sales tax.

But members strongly objected to the double-barreled proposal -- and recommended dumping the 3-cent-per-gallon increase. "I don't think we're going to recommend both the extension of the sales tax and the cents-per-gallon tax," Sen. John A. Cade, R-Anne Arundel, a member of the panel, said yesterday.

Faced with this opposition, transportation officials said yesterday they would probably drop the 3-cent-per-gallon proposal Monday.

Instead, they said, they expected to work over the weekend to come up with a proposal for a steeper increase in motor vehicle fees.

Senator Cade and some other panel members say they also plan whittle the DOT's request for new revenue from $1.5 billion to between $1 billion and $1.2 billion through fiscal 1996.

Even a slimmer motor vehicle tax package could face rough sledding in the 1991 General Assembly session, which begins Wednesday.

"I don't want to tell them how to run their business, but that [a sales tax on gasoline] is the least likely proposal to succeed," said William F. Zorzi Sr., spokesman for the state chapter of the Automobile Association of America. "It's going to be interpreted as a tax on a tax."

House Speaker R. Clayton Mitchell Jr., D-Kent, has declared he is opposed to any tax increase. As a result, delegates on the governor's Transportation Revenue Committee are expected to take no position when asked to vote on the panel's final report.

Several legislators and others said Gov. William Donald Schaefer was expected to introduce legislation implementing whatever his transportation panel recommended. But Paul E. Schurick, the governor's press secretary, said the governor was not necessarily committed to doing so.

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