The sales tax would be increased in increments of 2 percent annually, meaning if gas prices remained constant, the combined tax increase would be 21 cents per gallon. The tax would rise and fall proportionally to the price of gas.
That would exceed a state commission’s recommendation to raise gas prices 15 cents per gallon to fund a backlog of transportation projects. However, the commission did not anticipate how the state would pay for a proposed light rail, or Purple Line, connecting Montgomery and Prince George’s, as well as other big-ticket projects in Baltimore and elsewhere.
O’Malley announced the details in an interview with Mark Segraves on WTOP, acknowledging his proposal would not be the most popular. As he has repeatedly said in recent weeks, O’Malley insisted the state needs the additional revenue to reduce traffic congestion, and he urged residents to consider the additional cost on gasoline as reasonable alternative to the cost of time stuck sitting in traffic.
A new Washington Post poll, however, indicates O’Malley is likely to face blistering criticism over the proposal.
Fewer than half surveyed support even a 5-cent increase in the gas tax to fund more transportation projects.
When asked how they feel about an increase of 10 cents per gallon or higher, opposition swelled above 70 percent and across a range of income levels.
O’Malley said adding a sales tax to gasoline, which is now exempt from such levies under state law, would allow the revenue to the state collects to fluctuate appropriately with gas prices.
“We haven’t had any increase in our primary source of transportation funding, which is the gas tax, since the early 1990s,” O’Malley said. “At that time gas was about $1.08 a gallon, today it’s $3.50, $3.60 a gallon. And yet, the flat 23 cents that was set in the early 1990s is the same flat, 23 cents today.”
Asked if the state would do away with the existing 23 cents-per-gallon flat tax if it imposed a sales tax, OMalley said it should not.
“No, maintain the 23-cent flat tax,” he said.
O’Malley said his proposal would have some kind of “breaking” mechanism, so that if gas prices spike in a given year, the sales tax increase wouldn’t compound the costs for drivers.