REPORTS HAVE it that Mayor Barry is thinking about repealing the new city tax on gasoline, imposed only three weeks ago. Three weeks is too short a time to go sour on a marriage, a job or a tax. In the case of this tax, some short-termed problems were to be expected. The city's own Department of Finance and Revenue told the mayor and city council that Distract gas stations would lose 16 percent of their business permanently because of the tax. Some higher percentage of loss in total gas sales was estimated for the period immediately following imposition of the tax. Gas dealers said their estimates indicated there would be a 40 percent permanent loss of business if the tax were imposed. The mayor and council looked at the estimates and made a tough decision: the city needs the added $13 million in tax revenues that could come from the tax.
Now the mayor says he is considering repealing the tax. The reason for his change of mind is that D.C. gas station owners have told him that, so far, their business is consistently down by 38 percent. They say motorists find it cheaper to cross the District line to buy gas, taking with them the city's tax dollars and their profits. If the gas station owners are right about the size of the permanent drop in the sales, city officials estimate they will be short $10 million in tax revenues.
The gas station owners' projections may be right. But they are based on such a short period of time -- and a period right after the tax was put in place -- that they mean very little. In the first three weeks of the tax, gas buyers may be keenly aware of the price difference caused by the tax; they may drive the extra miles to avoid it. The question is whether the practice will continue.
The answer is probably not. There will be a drop in sales. But it will probably be closer to 16 percent than to 40 percent, according to tax specialists around the country. They say only a decrease in the gas tax in suburban jurisdictions could cause the loss of business in the District to reach 40 percent. Otherwise, the reduction in gas sales in the District will eventually rebound as people become accustomed to the price. Also, a conveniently located, available supply of gas is not about to be ignored by motorists for a few pennies' difference in price. Mayor Barry should give it time. The tax deserves at least a six-month tryout. That will give city revenue officials the time to determine if gas sales have actually dropped as much as the dealers claim. It is a tough decision to impose the tax. It is unpopular. But the city treasury is in need of money, and that money will have to come from the gas tax or some other tax, no doubt a tax that will be equally unpopular.