Maryland Governor’s Gas Tax is Right Way to Fund Transport

Cities need you. Support Next City and have your gift matched.Donate

Maryland Governor’s Gas Tax is Right Way to Fund Transport

Maryland Governor Martin O’Malley wants to take gasoline off the list of things exempt from his state’s sales tax. Ben Ross of Greater Greater Washington explains why this is a good idea, and suggests how the money could best benefit all transit users.

This piece originally ran on Greater Greater Washington.

In his Wednesday state-of-the-state speech, Governor Martin O’Malley proposed ending the exemption of gasoline from Maryland’s 6 percent sales tax. This is the best way for the state to get more money for transportation.

Ending the sales tax exemption, rather than increasing the gas tax beyond the current 23.5 cents per gallon, accomplishes two things. First, sales tax revenue keeps pace with inflation. With the current structure of the gas tax, politically difficult tax increases are needed just to keep transit operations and road maintenance constant.

Second, we now have an opportunity to refute a widely believed myth about transportation funding. Once upon a time, drivers paid for roads through the gas tax. Most people think that’s still true, but it’s not.

Maryland’s gas tax goes into the state’s Transportation Trust Fund, along with the sales tax on car sales, fares paid on MARC trains and MTA buses, and revenues from BWI Marshall Airport and the Port of Baltimore. When the gas tax was last raised in 1992, the 23.5-cent state tax was 33 percent of the pretax price of gasoline. The sales tax on other pur­chases was 5 percent. The heavy tax on gas could be described as a user fee paid by drivers.

Today, though, the state gas tax is a little more than 7 percent of the price of gasoline. When drivers buy gas, they pay 7 percent into the Transportation Trust Fund and get 6 percent back from the state’s general fund through the exemption of gasoline from the sales tax.

Ending the exemption would convert the gas tax back into a true user fee. Drivers would then pay a share of the cost of maintaining roads, just as transit riders pay a share of the cost of transit operations through their fares.

Many myths surround the subject of transportation funding, in Maryland as in other states. Transit advocates need to be vigilant as the legislature debates this issue to make sure that new funding builds transit lines and walkable grid streets rather than repeating the mistakes of the past. The better the public understands the realities of the state budget, the easier this will be.

Tags: infrastructurepublic transportationtransportation spendingtaxestrainsbaltimore

×
Next City App Never Miss A StoryDownload our app ×
×

You've reached your monthly limit of three free stories.

This is not a paywall. Become a free or sustaining member to continue reading.

  • Read unlimited stories each month
  • Our email newsletter
  • Webinars and ebooks in one click
  • Our Solutions of the Year magazine
  • Support solutions journalism and preserve access to all readers who work to liberate cities

Join 838 other sustainers such as:

  • Joseph at $5/Month
  • Anonymous at $40/Year
  • Anonymous in Shreveport, LA at $5/Month

Already a member? Log in here. U.S. donations are tax-deductible minus the value of thank-you gifts. Questions? Learn more about our membership options.

or pay by credit card:

All members are automatically signed-up to our email newsletter. You can unsubscribe with one-click at any time.

  • Donate $20 or $5/Month

    The 21 Best Solutions of 2021 special edition magazine

  • Donate $40 or $10/Month

    Brave New Home by Diana Lind