"Take Quick and Decisive Action," Lower Fuel Taxes on Overburdened Consumers, Taxpayer Group Urges Easley

(Alexandria, VA) -- Although the Katrina-related price spikes may be slackening, fears that Hurricane Rita will trigger more increases at the pump is another of many reasons for Governor Michael Easley to relieve overburdened consumers by cutting gas taxes. That's according to an open letter sent to Easley from the 350,000-member National Taxpayers Union (NTU), which has over 7,800 members in North Carolina.

"NTU encourages you to permanently lower state gas tax rates or provide temporary relief through a 'gas tax holiday,'" NTU Government Affairs Manager Kristina Rasmussen wrote to Easley. "It is our belief that such a move would be the best solution available for assisting consumers in your state in this time of crisis."

Barely two weeks ago, Georgia Governor Sonny Perdue temporarily suspended by Executive Order the state's per-gallon and sales taxes on gasoline. Last week, West Virginia Governor Joe Manchin announced he would freeze a gas tax hike scheduled to take effect on January 1, 2006. While laws in some states can limit the authority of chief executives over tax policies, all Governors can at least call special sessions of their State Legislatures to enact fuel tax relief.

Additionally, Rasmussen contended that there are other reasons for Governor Easley to act decisively on behalf of beleaguered motorists:

  • State Representative Louis Pate (R-Wayne) has called for a moratorium on the state fuel tax, and outlined a plan to cap, or eliminate entirely, the variable portion of the state's gas tax. North Carolina is one of only a few states with a rate that increases with the rise of wholesale gas prices -- a system that could bring higher fuel costs back in January since the variable share is based on the average price of gas during the previous six months.
  • North Carolina's fat budget surplus, and the $15.65 billion the state expects to collect from taxpayers this year, indicates that the government is capable of absorbing revenue "losses" from tax reductions without "fear of creating a fiscal imbalance," Rasmussen said.
  • At nearly 27 cents per gallon, North Carolina's gasoline excise tax ranks 7th-highest nationally according to the Federation of Tax Administrators. The combined state-federal burden amounts to over 45 cents per gallon, or the equivalent of $6.79 on a typical 15-gallon fill-up.

"Surely the state can afford to give back to overburdened motorists by suspending the gas tax until the end of the year," Rasmussen concluded. "Although using budget reserves to fund new spending programs may be tempting, lowering state gas taxes immediately is the better way to assist North Carolinians as all taxpayers and aspects of your state's economy are affected by rising gas prices."

NTU is a non-profit organization working for lower taxes, smaller government, and economic freedom at all levels. Note: Rasmussen's letter to Easley, along with numerous studies and commentaries on government transportation policy, may be accessed online at www.ntu.org.