Indiana Sales Tax on Gasoline
Indiana House Minority Leader Patrick Bauer is putting forth a measure that would make gasoline exempt from the state sales tax much like food and medications. He points out that if President Bush’s tax cut was good for the economy that this would be, too.
And he’s right . I’m just amazed any Democrat would ever use “George Bush did it, and it worked” as reasoning for, of all things, a tax cut.
The Republicans have maintained for years that the way to encourage growth in Indiana is to get out of the way of business. The Governor has pushed the toll road lease and Indiana’s geography as a key point in attracting transportation hub type business to the State, and rightly so. A 6% reduction in fuel costs could only help to make Indiana more attractive to transportation and logistic business. But, Democrat Rep. Bauer will show himself for a hypocrit and partisan hardball player (which the observant already know he is) if uses this Republican reasoning and does not also exclude E85 and diesel from sales tax. Or would that be a “tax break for the rich”, Rep. Bauer? Probably.
But consider, what if we take this a bit further? If fuel is like food, being a necessity to life, then this exemption should apply to more than just gasoline which is only one product of a whole energy product line that can and does disproportionately effect the poor. Therefore, if the Representitive is sincere exempt electricity, propane, natural gas, diesel, kerosene and fuel oil, too. All of which are used to heat and cool our homes and they are no less a life necessity, if that is to be the exemption yardstick.
One thing I did not know, though, is that most states do exempt fuel from sales tax. In Indiana, on a $3 gallon of gasoline Hoosiers are paying roughly $0.54 per gallon in State and Federal taxes. ($0.18 to each State & Fed plus 6% sales tax on $3 is $0.54). Dropping sales tax would reduce the Government overhead by fully one third at todays prices.
When this was brought up last year I actually opposed it simply because the State was so far into the red. Even now Gov. Mitch has barely cleaned up the 16 years of Democrat red ink. But now that the State is in the black it is time to consider where level off the Hoorier tax burden and even start rolling it back. That would only be possible if the approximately $300million in gasoline sales taxes are offset. But not by new taxes elsewhere!
Being the cynical person that I am, if this exemption gets through, you can bet your last dollar that they’d find $600 million from “the rich” as quickly as the Dem’s could get it through. Especially if they managed to gain seats in November.
I think Representitive Bauer is hoping this fails to gain traction. He is counting on the more fiscally constrained in the Senate and Legislature will stick to their guns, that it’s just a bit to soon for a barely solvent government to give away $300 million a year.
Don’t think the irony of the role reversal is lost on me….