Md. could get 5th highest gas tax under O'Malley plan

January 31, 2012|Jay Hancock

Gov. Martin O'Malley has proposed applying Maryland's 6 percent general sales tax to the price of gasoline, Michael Dresser reports in the paper. Maryland would be the eighth state to put a general sales tax on motor fuels on top of a state excise tax, not to mention the federal excise tax, according to the Tax Foundation.

Assuming no other states change their gas taxes between now and when the new Maryland tax would be fully phased in -- a big assumption, granted -- O'Malley's tax would make Maryland's combined gas taxes the fifth highest in the country, according to the chart below from the American Petroleum Institute. Under O'Malley's proposal, at current gas prices total Maryland state and federal gas taxes would rise to 58.9 cents per gallon, putting the state No. 5 after Hawaii. (To see how I got this number see explanation below the chart.) 

The proposal is to tax Maryland gas by 6 percent in addition to the 41.9 cents per gallon that Marylanders now pay in state (23.5 cents) and federal (18.4 cents) excise taxes. The API chart uses Jan. 1, 2012, gas prices to calculate proportional sales taxes. Maryland's average gas price on Jan. 1 was $3.26 per gallon, according to AAA.

Back out the excise taxes and you get a taxable gas price of $2.84, which would make the added sales tax 17 cents. (This differs from the 18 cents Dresser used because gas prices have risen since Jan. 1, but I wanted to compare apples/apples using the API ranking.) Add 17 cents to the 41.9 cents that Marylanders now pay in gas tax and you get 58.9 cents per gallon.

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