Inside Augusta

Don’t fall for the seasonal gas tax gimmick

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Roads across Maine are in rough shape this time of year, and a lot of attention has been paid to the conditions of our roads in recent weeks. I mean a lot. The Bangor Daily News even made a map of nearly 200 potholes in Bangor, and the city’s public works department patched them all within 24 hours.

While we can all likely agree we should take better care of our infrastructure, some of the legislative proposals to address the issue would steer Maine in the wrong direction. This includes LD 1157, a proposal to impose a seasonal gas tax in Maine.

The bill, sponsored by Rep. Andrew McLean, would reduce Maine’s gas tax to 27 cents per gallon from November 1 to May 31 and increase it to 37 cents per gallon between June 1 and October 31. The current gas tax in Maine is 30 cents per gallon. Maine’s Transportation Committee on Tuesday held a public hearing on the measure, which was widely opposed by those present.

The bill intends to maximize the presence of tourists during the summer and fall months by increasing the gas tax to enhance gas tax receipts, but the reality is that the tax affects all Mainers as well. Decreasing the gasoline tax in the colder months and increasing it in the warmer months is simply a gimmick that still introduces an overall increase in the gasoline tax. As previously mentioned, this tax is already 30 cents per gallon in the state of Maine, ranking 24th highest among all states.

Source: Tax Foundation

Introducing a net increase would make Maine less competitive with other states. New Hampshire, a state without an income tax or sales tax, ranks 35th on the same list. Even Massachusetts has a more favorable ranking than Maine.

The notable comparison is with New Hampshire, however, as we already lose much business to our neighbor due to the taxes and mandates we already impose. A 2011 study by the Maine Heritage Policy Center found that, between 1951 and 2007, Maine lost $2.2 billion in retail activity to New Hampshire.

As highlighted in testimony submitted in opposition to LD 1157 from the Maine Energy Marketers Association, Maine is already at a competitive disadvantage to New Hampshire in several areas. New Hampshire has a smaller tobacco tax, alcohol tax, minimum wage and does not enforce a sales tax. Imposing any tax increase that further distances us from New Hampshire will only hurt Maine businesses.

Bruce Van Note, the Commissioner of the Department of Transportation, testified that “there is not a substantial seasonal variance in fuel tax collections in Maine between the warm and cold seasons.” According to data shared in his testimony, 52 percent of the state’s annual gas tax receipts come between May and October while 48 percent of receipts come between November and April.

“Based upon this information, it appears this bill will not reach the appropriate bipartisan policy goal of attempting to increase transportation funding while minimizing the impact on Maine citizens,” Van Note said in his testimony. “Accordingly, the solution contained in LD 1157 appears to be unsupported by available data, and its policy benefits appear to be outweighed by administrative concerns of implementation and concerns from the tourism industry.”

In addition, Mainers have the 16th longest daily commute in the nation, averaging 43.7 miles according to a study of auto insurance policies sold by Answer Financial in 2018. Census Bureau data also shows more than 75 percent of all Mainers over the age of 16 commute to work alone by car, truck or van.

While all of these individuals would be affected by this increase, it would hurt Maine’s working poor the most. People who make less than $25,000 annually incontrovertibly spend a larger proportion of their income on gas and fuel than people who make $100,000 or more. The fuel tax itself is regressive in nature and its increase would hurt low-income Mainers. Research shows state-level increases to the gas tax are immediately realized in retail pricing.

To be frank, Mainers are taxed enough already. An analysis published Tuesday by WalletHub financial writer Adam McCann finds that Maine has the third-highest tax burden of all states (measured as the combination of property taxes, individual income taxes and sales and excise taxes as a share of total personal income). Meanwhile, New Hampshire enjoys the fifth lowest overall tax burden in the country.

And to make matters worse, lawmakers have introduced countless bills this legislative session to increase other taxes and fees on hardworking Mainers, including a local-option sales tax, a carbon tax and an increase in the diesel tax, among others.

Mainers should not be subject to exorbitant tax rates, especially when our closest neighbor continuously enjoys the economic benefits of low taxes at our expense.

About Adam Crepeau

Adam Crepeau serves as a policy analyst at The Maine Heritage Policy Center. He can be reached at acrepeau@mainepolicy.org.

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