At 39 cents per gallon, Pennsylvania currently is the 7th-highest taxed state for gasoline. As part of his transportation initiative, Gov. Corbett has proposed lifting the cap on the “oil company franchise tax” and making that tax burden even higher.
This is a relatively obscure tax that is paid directly by gas stations based on the wholesale price of gasoline. Right now the maximum wholesale price that the tax can be calculated from is $1.95 per gallon, a per-gallon price we’ve long since surpassed. By lifting the cap the state will collect more in taxes based on the current wholesale price of gasoline.
According to the Governor’s magical thinking, somehow this tax increase will not be passed onto consumers, i.e., gas station owners will just accept lower profits. An article from the Philadelphia Inquirer notes: “…Corbett has said that multiple factors affect gas prices and that he had not ruled out having the state's prohibiting distributors from passing an increase to customers.”
The idea that prohibiting the tax from being passed onto consumers would work is absurd. It is likely that some gas stations would go out of business if this edict were made into law, find a more creative way of collecting the tax increase (raising the price on soda, candy bars, etc.), or decrease wages and benefits as a way to offset the difference. Any way you slice it, businesses don’t pay taxes.
Like most things in government, the problem isn’t a lack of revenue for transportation; the problem is how revenue is spent. According to state data, PennDOT has over 11,215 salaried workers, not including contracted employees. The average salary is $43,735, and the average benefits cost per state employee is $25,228 (the amount was unavailable for PennDOT specifically). As a department, PennDOT ranks third in terms of the number of people it directly employees. How many of those positions could be consolidated or contracted out at a lower cost?
Additionally, Pennsylvania has done a poor job in terms of prioritizing funding. Rather than spending money on fixing roads and bridges, the Commonwealth has poured millions of dollars into “beautification”, streetscaping, bike trails, etc. Every dollar spent on these projects is a dollar that hasn’t gone to needed repairs, upgrades or the maintenance of roads and bridges.
Furthermore, road and bridge funding should be given priority over other state programs. Providing infrastructure is a core function of government. On the other hand, providing tax credits for Hollywood film production, funding sports stadiums, building the Arlen Specter library, and other corporate welfare is not the proper domain of government, nor is it in the best interest of taxpayers. It is unconscionable for Governor Corbett to propose a gasoline tax increase without reprioritizing current spending.
Finally, Pennsylvania spends more than $94,000 dollars per road mile, which is the tenth highest in the nation. Taxpayers are forced by state law to overpay for labor on road projects due the Commonwealth’s so called “prevailing wage” law. Repealing this outdated law would immediately lower labor costs to the market rate for not only the state, but also local governments and school boards as well. Lowering the cost would enable more projects to be completed without spending additional money.
Governor Corbett has not “officially” announced his intention to increase this tax. Give his office a call at 717-787-2500, maybe you can talk some sense into him.
If you are from Pennsylvania, it would also be worthwhile for you to contact your Representative and Senator today. If you need their phone number, or aren’t sure which district you are in, go here. Tell them you can’t afford to pay any more at the pump.
This post was adapted from a blog entry from Citizens Alliance of Pennsylvania.