Gasoline sales in the District of Columbia plummeted by 27.5 percent during August, the first month in which the city's 6 percent gasoline tax was in effect.
According to figures released yesterday by the D.C. Department of Finance and Revenue, the tax -- about 8 cents per gallon of gasoline based on current prices -- brought in $750,000 for the 26 days in August it was in effect. The city had originally estimated that the tax would bring the city $960,000, even taking into account the six-day, court-ordered delay in imposing the new tax.
While city officials had estimated a 16 percent loss in gasoline sales because of the new tax, service station dealers have consistently maintained that their actual losses are closer to 40 percent, since customers are driving an extra mile or two to Maryland where gasoline is cheaper.
The figures released yesterday were the first official statistics from the city on the effect of the controversial tax. They seemed to confirm the fears of many critics that the tax -- while not having as sharp an effect on sales as gasoline dealers predicted -- is having a more severe impact on sales than city officials expected.
"The ordinary service establishment probably cannot survive this," said Mark Emond, editor-in-chief of the Lundberg Letter, an independent weekly newsletter that analyzes marketing trends in the petroleum industry. "[The lowered sales are] just not [economically] sustainable. Who can afford to take that kind of kick in the shins?"
Mayor Marion Barry first proposed the 6-percent gasoline tax as part of a $15-million package of new and increased taxes to help the city reduce the budget deficit in the year that ended last Wednesday and balance this year's budget. On Aug. 25, however, after meeting with service station owners, Barry said he would consider repealing the tax once he was shown official figures to substantiate the owners' claims that the tax was cutting sharply into their businesses.
Barry said then he would decide whether to recommend repealing the tax after Sept. 20, once the city's 240 gasoline stations filed their first sales tax returns with the city's Finance and Revenue Department, and the returns were compiled. Yesterday Carolyn Smith, director of the department, said she decided -- and Barry agreed -- to wait until the tax had been in effect for three months before making a decision.
"We will continue to follow our previously announced plan to wait until we have data for the District and several other jurisdictions over a three-month period before we decide whether to recommend any change in this tax," Smith said.
Since the imposition of the tax in the District, a gallon of gasoline in the city generally costs about 10 cents more than in Maryland and about 5 cents more than in Virginia.
Meanwhile, service station owners and managers interviewed yesterday -- especially those close to the Maryland border -- insisted that the city's figures on sales losses were understated compared with their actual drop in business.
On upper Connecticut Avenue near the Maryland border at Chevy Chase Circle, three gasoline station managers and employes said their sales were down between 40 percent and 75 percent, and they were staying in business solely with the support of their receipts from repair work.
The Amoco full-service station at Connecticut and Fessenden streets NW used to pump 3,000 gallons of gasoline each day before the tax, according to John Conner III, the station owner's son. Conner said the station now pumped a little less than 1,500 gallons during an average day.
"We used to have 12 employes," Conner said, watching the cars on Connecticut Avenue at rush hour whizzing past his dormant station on their way to the Maryland suburbs. "Now we're down to two employes to each shift" for a total of four workers, he said. "We don't get any business. One person can handle it now. It gives you a lot of time to sleep."
At the Sunoco station across the street, manager Raj Gnanasundram said, "Nobody's selling any gas now. We're keeping the station open for the mechanic's work. I've got to tell you the truth -- even though I'm the manager here, I don't get my gas here. I go to Maryland now -- it's 30 cents cheaper there."
Gnanasundram once kept his station open 24 hours a day. After the gasoline tax took effect, he said he cut the hours from 24 to 16, and finally to 14 hours daily. The station used to sell about 30 quarts of oil a day to customers buying gasoline, he said. But now, with the tax on gasoline, he said he is lucky to sell five quarts of oil in a day.
Further up Connecticut, at the last Exxon station before the Maryland line, manager Bill Hutchinson said he has laid off six employes since the tax was imposed. Of the three service islands in his station, only one -- the self-service island -- is being used. "We do a lot of housecleaning now that we didn't get to do before," Hutchinson said.
Hutchinson said he is now charging 10 cents per gallon less on his gasoline at the self-serve pump than he should to make a profit, "just to get rid of some of the gas." He said, "The D.C. customers stop and say, 'Give me $3 worth so I can get to Maryland.'"