Mayor Marion Barry proposed yesterday that a scheduled two-cent increase in the District's tax on gasoline be cut to one cent, even though he estimated that the move would cost the city $100,000 in revenue this fiscal year and $1.6 million in the year beginning Oct. 1.
Barry called the action "vital to the well-being of the service station industry" in the city. Gas station owners have lobbied in recent weeks to have the two-cent increase eliminated. At Barry's request, the City Council mandated last year that the tax increase take effect on Monday.
Barry asked that the council declare an emergency at its scheduled Tuesday meeting and halve the tax increase. He also sent the council permanent legislation specifying that the city's gasoline tax shall never exceed that of suburban jurisdictions by more than three cents. The current law provides for a differential of no more than five cents.
But John A. Wilson (D-Ward 2), chairman of the council's finance committee -- through which the tax proposal must pass -- said later that he believes the tax cut is "an election-year giveaway" and vowed to oppose it.
"I don't see why at this point we ought to give this kind of relief," Wilson said. "This opens a Pandora's Box. Every year, we do this. As soon as the election starts, we start giving away money." Wilson was referring to Barry's expected reelection bid next year.
The District currently charges an 11-cent gasoline tax, compared to nine cents a gallon in Maryland and 11 cents a gallon plus two percent of the retail price in Northern Virginia. The legislation proposed by Barry would raise the District's tax to 12 cents a gallon.
Barry said that at the time the original two-cent increase was approved, he anticipated an identical increase in Maryland. But the Maryland legislature did not approve a gasoline tax increase.
"Without enactment of this legislation, we would be placing this segment of our business community at a severe competitive disadvantage, resulting in the loss of as many as 100 jobs and perhaps the loss of some service stations," Barry wrote in a letter to Council Chairman Arrington Dixon. "Many of the service stations which are now experiencing financial hardship are minority owned and operated."
Barry said the legislation "eases somewhat service station owners' adjustments to changing consumption patterns," including a steadily falling demand for gasoline.
Barry also sent to the council a bill that would extend the city's general sales tax to include computer software and information services. He estimated that this tax could earn the city $3.2 million in revenue during the next fiscal year, which he said would more than offset the money lost by halving the scheduled increase in the gasoline tax.