Uncapping the Oil Company Franchise Tax would allow Pennsylvania’s gas and diesel taxes to rocket upwards, making them the highest tax rates in the nation. The lifting of the cap to create higher tax revenues is an instrumental part of Republican Gov. Tom Corbett’s plan to pay for repairs to the state’s crumbling transportation system.
“We will be the highest gas tax in the nation, “ State Rep. Stephen Barrar (R-Delaware) told CBS Philly. “Can you imagine what [the increase in diesel] is going to do to the cost of deliveries?” he added.
According to the American Petroleum Institute, Pennsylvania currently has a gas tax of 50.7 cents per gallon, the fourteenth highest in the nation. New York has the highest gas tax at 68.9 cents, and the national average is 49 cents.
The uncapping would cause the wholesale price to rise by 28.5 cents a gallon for unleaded gasoline and 38.5 cents a gallon for diesel — a price that likely will be passed on to the consumer at the pump.
The proposal to uncap the Oil Company Franchise Tax uncap is part of the transportation bill currently in the House. Corbett’s original transportation bill suggested uncapping the tax over five years, while Senate Bill 1 brought that down to three years. Now, an amendment from House Transportation Committee Chair Dick Hess (R-Bedford) uncaps the tax over a 10-year span.
Corbett also proposed reducing the flat tax portion of the state gas tax by about two cents over two years. With that two cent decrease added to the 28.5 cent increase, the Pennsylvania gas tax would still be over 75 cents a gallon, topping New York by over six cents.
Similarly, Pennsylvania’s diesel tax is currently the seventh-highest in the nation. And with the 38-cent increase, it will be the nation’s most expensive diesel tax by over 20 cents per gallon.
Stephanie Wissman, Executive Director of the Associated Petroleum Industries of Pennsylvania (API-PA), told Media Trackers that API-PA could not say for certain if the 28 cents would be passed on to the consumer.
“That’s something we don’t know,” she said. “It’s up to each individual company.”
She added that API-PA is neutral on the transportation bill currently in the House.
“We recognize the Commonwealth’s obligation for safe and reliable transportation infrastructure,” she said. “I will say the transportation funding plan seems to be a rational approach.”
The Commonwealth Foundation pointed out in December that there’s simply not a shortage of funds under existing transportation funding mechanisms. Instead, according to the Commonwealth Foundation, the current dollars are just not being used efficiently. Pennsylvania spends more than $71,000 per road mile, ranked 11th among the other states for the most expensive, the Commonwealth Foundation’s report found. Highway spending also costs $660 per person, which is higher than 26 other states.
The foundation also points out that state transportation spending has more than doubled over the past 17 years.