Capital News Service – Republican Gov. Larry Hogan said Tuesday that he is working with legislators to address concerns that service station owners could pocket the benefits of an emergency 30-day gas tax holiday the Maryland General Assembly is working to pass this week.
Consumer advocates and tax experts across the country are skeptical that consumers will benefit from the tax break as intended. Chuck Ulm, director of the comptroller’s Field Enforcement Bureau, said at a Tuesday hearing before the House Ways and Means Committee the office has no mechanism to ensure gas stations would lower prices in step with the relief they get from the tax break.
“We’ve discussed that with the legislature to make sure that doesn’t happen and we’re gonna press all the providers to make sure there are actions that we take,” Hogan said at Tuesday’s press conference. “Every time we have an emergency situation, we’re making sure there’s not price gouging.”
Lawmakers met Tuesday in the Senate and House of Delegates to discuss the legislation, (SB1010/HB1486) which would waive the more than 36-cent tax per gallon of gas for 30 days at a cost of nearly $94 million to the state.
Gas prices in Maryland have jumped by about 75 cents in the last 30 days, according to AAA.
In Maryland, gas stations pay the state’s gas tax in advance to their fuel suppliers and recoup the cost from consumers.
At the request of state Comptroller Peter Franchot, a Democrat running for governor, Del. Eric Luedtke, D-Montgomery, introduced an amendment to the bill in the House Tuesday that Franchot said he hopes will help consumers see prices drop faster.
Franchot’s amendment will allow the state to offer refunds to gas stations for the tax they paid on the amount of fuel they have already purchased when the tax holiday goes into effect, a move he said levels the playing field for businesses and should help consumers see price decreases.
The legislation and the amendment passed the committee on Tuesday.
“The Maryland Comptroller’s Office is ready to implement this much-needed legislation to provide immediate relief at the gas pump upon its passage in the legislature and when the Governor signs it into law,” Franchot’s office said in a statement.
“We thank the House Ways and Means Committee and the Senate Budget and Taxation Committee for the collaboration on this crucially important bill and for adopting amendments we have put forward, which ensure fairness for gas station owners, protect consumers, and allows for effective enforcement of this emergency legislation.”
At least 17 states are mulling the idea of a gas tax holiday to address rising fuel prices, according to the National Conference of State Legislatures, with lawmakers conflicted over whether it is a viable solution. Tax experts and consumer advocates said they are concerned drivers will not see strong benefits at the pump.
Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center at the Urban Institute, said consumers might not be able to tell if they are seeing the benefit of the tax holiday as initial price drops drive up demand, further increasing costs.
It will not be possible to tell if gas stations are pocketing some of the tax break, Gleckman said in an interview with Capital News Service, as prices continue to change quickly.
Lobbyists for gas stations and fuel providers cautioned that people should temper expectations about the impact of the gas tax holiday and that drivers should not expect an immediate 37-cent drop. Their comments came at a hearing before the Senate Budget and Taxation Committee Tuesday.
Franchot called last week for a three-month tax holiday after approving projections that put the state’s budget surplus at $7.5 billion.
Hogan said he was not sure the 30-day holiday would be enough to address price concerns and said he wanted a longer suspension of the tax.
“I’m not convinced that it’s going to be solved in 30 days,” Hogan said. “I actually pressed for longer, but that’s where we are with a compromise agreement with the legislature.”
An amendment introduced by Del. Kevin Hornberger, R-Cecil, to the House bill to extend the holiday to 90 days lost by a vote of 12 to 11 Tuesday afternoon in the Ways and Means Committee.