State officials and lawmakers say they’re not inclined to push for a gas tax suspension as many prices remain over $4.50 a gallon.
Indiana’s average pump price hit $4.57 for a gallon of regular gasoline as of Friday, up from $4.09 a month ago and up from $2.97 around this time last year, according to AAA. The organization tracks gas prices across the country.
The Indianapolis metropolitan area has seen the average gas price go up from $3.97 last month to $4.53 as of Friday. Also on Friday, the average gas price for regular in Johnson County was $4.49, according to AAA.
The higher prices come at a time when Indiana motorists are paying about 56 cents per gallon in state taxes on gasoline — the highest-ever level shown in state records.
Indiana has two taxes on gasoline — the 7% state sales tax and a tax directed to infrastructure projects. The sales tax charged at the pump is calculated monthly and the state revenue department determines it based on the statewide average retail price over a month-long period.
This tax is currently 24.1 cents a gallon, and next month the tax will remain steady at 24 cents a gallon, according to a calculation released last week by the Indiana Department of Revenue. The road projects tax that’s currently 32 cents a gallon is set to go up by 1 cent in July, the Associated Press reported.
The road projects tax is currently 32 cents a gallon and is set to go up by 1 cent in July. There is also a federal excise tax of 18.4 cents a gallon on gas that state lawmakers do not have control over.
For the last two weeks, Democrats in the Indiana Statehouse have been calling for Republican Gov. Eric Holcomb to issue an emergency order suspending the gas tax or to call a special session so lawmakers could take action on the gas tax. They’ve also called for the GOP-dominated legislature to do so when lawmakers held a one-day meeting last Tuesday, the AP reported.
Holcomb has said he does not have the authority to suspend the gas tax. For the Indiana governor to suspend the tax through a declaration of an energy emergency, the state has to have an existing or projected energy shortfall that could jeopardize life, health and property, he said in a statement to the Daily Journal earlier this month.
Both the Indiana Department of Transportation and the state’s Office of Energy Development have confirmed there is no current or projected shortage, he said.
“We have not met that threshold,” Holcomb said.
Other states have suspended the gas tax, however, they went through the legislature to do so, he said. These states include Connecticut, Georgia Maryland and New York.
Democrats had previously pushed in March for a gas tax suspension that would cost $125 million a month as national gas prices pushed past $4 a gallon after the Russian invasion of Ukraine. However, House Republicans argued much of the gas tax money was dedicated to Indiana’s highway construction programs, and instead pushed a plan to gradually cut Indiana’s individual income tax rate over the next seven years.
All of this comes as the state’s tax collections have continued to be bountiful. Overall state tax collections have reached $1.8 billion, or about 12%, more than where they were a year ago in terms of fiscal year revenue through the end of April. This is projected to likely push cash reserves from the record $3.9 billion set last year to $6 billion when the budget year ends June 30.
Last week, Holcomb did say he was preparing a plan for inflationary relief for Hoosiers to be released in early June. No additional details were provided at the time, the AP reported.
Senate President Pro Tem Rodric Bray, R-Martinsville, told the Daily Journal he believed the calls for suspending the gas tax and holding a special session for a suspension are signs that Hoosiers are hurting from inflation. Hoosiers are trying to find some relief, he said.
Bray has not asked the governor about holding a special session on the gas tax, as he does not think it would be helpful for the gas tax, he said.
While Bray understands the calls for relief, he said he believes that any suspension of the gas tax would only help Hoosiers a little. If a suspension were to occur, there are not any guarantees that gas stations across the state would lower their pump prices by that amount. The state has suspended the tax before, in 2000, and many gas stations did not lower their prices by much, Bray said.
If legislators want to help Hoosiers as they experience high inflation, there are other ways to do so, Bray said.
“We need to do something that is more substantive and long-lasting,” Bray said.
For example, actions like the automatic taxpayer refund, along with the legislature’s actions earlier this year to remove the utility receipts tax and to cut the individual income tax, could have a bigger, more substantial effect, he said. The plan approved earlier this year would gradually cut the state individual income tax rate from 3.23% to 2.9% beginning next year until its planned full implementation in 2029.
“Those are things that are long-lasting and have an impact,” he said.
Another issue with suspending the gas tax is what happens when the suspension is over. Any suspension of the tax would be temporary, and by the time it goes back into effect, there’s no guarantee that the prices would be any lower, Bray said.
“Whenever the tax kicks back in, inflation would not be gone,” he said.
Another potential complication is that people from out-of-state who use Indiana roads would also benefit from the tax suspension, along with large companies. Because of this, it’s not a great way to get money back into Hoosiers’ hands, Bray told the AP last week.
Other local Reps. Michelle Davis, Peggy Mayfield and John Young did not respond to requests for interviews.
BY THE NUMBERS: PUMP PRICES
Here’s a look at current average gas prices in the Indianapolis metro area compared to last month and last year, as of Tuesday afternoon:
Last month: $3.97
Last year: $2.94
Last month: $4.30
Last year: $3.234
Last month: $4.65
Last year: $3.568
Last month: $4.89
Last year: $3.21