On Monday, Maryland Gov. Martin O’Malley released his proposal to restructure Maryland’s gas taxes to raise $3.4 billion for transportation over five years. The plan is superficially similar to the recent Virginia transportation funding bill, but improves upon it in several ways.
Maryland needs new revenue this year. Without it, the Purple Line, the Corridor Cities Transitway and the Baltimore Red Line could all stop moving forward.
The key to the bill is a new 2 percent wholesale tax on gasoline. Wholesale taxes differ from normal gas taxes in that the gas distributor pays them rather than the consumer. The distributor then usually passes the tax along to consumers via higher prices.
The plan partially offsets this wholesale tax by reducing the normal gas tax, from 23.5 cent per gallon to 18.5 cents per gallon. But the plan would also index the new lower gas tax to inflation, so it would increase slightly each year.
Taken together, overall tax revenue from gas would go up by about 2 cents per gallon as soon as the bill takes effect. In 2014 the 2 percent wholesale tax would increase to 4 percent, increasing gas tax revenue by another 9 cents.
[Continue reading Dan Malouff’s post at BeyondDC.]
Dan Malouff is an Arlington County transportation planner who blogs independently at BeyondDC.com. The Local Blog Network is a group of bloggers from around the D.C. region who have agreed to make regular contributions to All Opinions Are Local.