What would you do with a few extra nickels?
If it seems like politicians want to cut the gasoline tax every time fuel prices begin to skyrocket, as we’ve seen during the past month, well you’re right.
You may recall, for example, how the massive gas price hikes during the summer of 2008 (during a presidential election season, by the way) brought out urgent political calls for a gas tax cut. Last week, the N.H. Republican House leadership said one solution to today’s high gas prices is a temporary 5 cent per gallon cut in the tax through June 30.
Naturally, Gov. John Lynch disagrees.
The proposal
To compensate for reduced revenue stemming from the tax cut, money would be collected from the $30 car registration surcharge, which is also set to lapse after June 30. The registration surcharge money goes into the Department of Transportation’s Highway Fund budget, so the tax cut would essentially take away money that would otherwise go for road and bridge construction and maintenance. It’s estimated the temporary tax cut would cost at least $6 million.
New Hampshire’s gas tax is 18 cents per gallon, ranking in the bottom third of the country’s gas tax rates, and hasn’t been raised in two decades.
The proposal will be attached as an amendment to Senate Bill 78, which would eliminate the registration surcharge immediately upon passage — and which Lynch has threatened to veto.
Back-and-forth
House Speaker William O’Brien (R-Mont Vernon), according to the Concord Monitor, seemed to dare Lynch when he said, “Does he see the same pain that we see in the economic life of New Hampshire?”
“This proposal is simply a political gimmick and would offer no relief at the pumps for the people of New Hampshire,” Lynch’s spokesman Colin Manning also told the Monitor. “What it would do is provide less money for the people of New Hampshire to maintain our roads and bridges.”
Gas tax talk usually drives economists to the extremes. Supporters cite economic benefits to consumers and convenience store owners. Opponents believe the quickest way to bring down gas prices is to cut demand by driving and buying less, which they say is what happened in 2008 when gas prices spiked at around $4 a gallon and demand dropped.
The big picture
In his budget proposal, Lynch kept the surcharge in place through 2013 to help pay for tens of millions of dollars in road and bridge construction projects.
But since last fall’s election campaign season, Republicans have focused on the $30 vehicle registration surcharge as a political issue. Last week, they issued a report showing the surcharge’s impact on towns and cities across the state.
The House report offers no plan for making up the lost revenue to pay for scores of projects the Department of Transportation says will be put on hold if the House budget plan — without the surcharge — is passed.
In other tax cut news, the Senate Ways and Means and Committee has come out against a House proposal to cut the tobacco tax, House Bill 156. The bill is scheduled for a full Senate vote on April 27. It could be an early preview of how the Senate and House approaches to revenue reductions compare. (You can see an earlier report on HB 156 here.)
Q&A
Would you rather have a 5-cent reprieve in the gas tax for two months, or see that money go to roads and bridges? Let us know in the comments box, below. (See the comments policy here.)
>> A public hearing on eliminating the registration surcharge and temporarily cutting the gas tax by 5 cents (SB 78) will be held in the House Finance Committee, Room 210 of the Legislative Office Building, on Tuesday, April 26, at 10:00 a.m.
This Daily Briefing was written by Michael McCord.