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State Rep. Gregory W. Porter: Suspending the gas sales tax for Hoosiers is the least Gov. Holcomb can do

IHDC in the News

Originally published in the Indianapolis Star on March 28, 2022, the below op-ed by Rep. Gregory W. Porter (D-Indianapolis) makes a case for suspending the state gas taxes: 

My duty as a state legislator is to materially improve Hoosiers’ lives. And right now, gas prices are an economic thorn in the side of all Hoosiers. A year ago, a gallon of gas cost $2.70. Now, it costs $4.25. For some, gas prices teetering between $4 and $5 is an inconvenience. For others, it’s devastating. 

Gas is hardly a discretionary expense in Indiana. We live in a state where rural communities depend on cars and urban communities like Indianapolis have to fight off attacks on public transportation every legislative session. Keeping down the cost of transportation is essential.

When the General Assembly was finalizing a tax cut that will not go into effect until 2023, House and Senate Democrats proposed incorporating an immediate suspension on the sales tax on gas and state gas tax through July. Inflation is at a 40-year high, and these high gas prices will remain with us for a while and continue driving up the prices of other goods and services.

Republican legislators failed to seriously consider this proposal. As a result, I am calling on Gov. Eric Holcomb to, at minimum, suspend the sales tax on gas. Preferably, he would also suspend the 32-cent gasoline excise tax. With a $5 billion surplus, we have money in our state coffers to offset the lost gas tax revenue that funds road repairs. 

In 2000, Gov. Frank O’Bannon suspended the gas sales tax when prices were skyrocketing, so this move would not be without precedent. This policy has been adopted by other states, too. In the past few weeks, Connecticut, Georgia and Maryland have suspended their state gas taxes.

At the end of the day, though, this proposal is primarily about relieving Hoosiers from the burden of rising costs of goods and services. So there are other ways to accomplish this.

If Gov. Holcomb does not find the gas tax cut amenable, instead we should take advantage of the administrative ease that would accompany something already in the works: adding $100 to the $125 automatic tax refund (ATR) that will be distributed to Hoosiers starting in April.

About 4.3 million Hoosiers, including an expanded number of Hoosiers who did not make enough money to pay the state income taxes, are set to receive the ATR. If we add $100 to the ATR, it would be very easy for the State Board of Finance to transfer this money, about $480 million, from the state surplus. This is already a transaction set to take place and the Indiana Department of Revenue already has Hoosiers’ taxpayer information on file.

This method provides several benefits. Many small businesses file their taxes through the individual income tax, so businesses that need relief the most would be sure to receive it. Additionally, increasing the ATR means that every cent of the economic relief is guaranteed to reach taxpayers – if we suspend the gas tax, there’s a small potential for retailers not to pass on the full amount of relief at the pump.

What’s more, if anything is to be evidenced from this year’s bitter, adversarial legislative session, it’s that public life in Indiana is reaching all-time political polarization highs. Granting folks a respite from gas taxes while prices remain high is one issue whose popularity cuts across party lines.

Recent Politico polling shows that 73% of voters support a “temporary break” from federal gas taxes, while 72% support a break from state gas taxes. In fact, this policy is even more popular with Republicans than Democrats – 50% of Republicans and 43% of Democrats strongly support it.

By my estimation, this legislative session has left Hoosiers with the impression that we’re more interested in staging a national culture war battle on the floors of the House and Senate chambers than responding to peoples’ basic needs. In suspending the state gas tax, we can prove to Hoosiers that we are, in fact, invested in working on their behalf.

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