WASHINGTON. – Maryland Democrats are proposing raising the state gas tax to pay for road and transit project but opponents of the idea say an increase would unfairly hurt the lower and middle classes.
Senate President Mike Miller has suggested raising the gas tax to 3 percent. But Marylanders who earn between $20,000 to $50,000 spent the greatest portion of their income on gas and they would be hit hardest by that tax increase, according to a study released Tuesday by Americans for Prosperity Foundation and Sage Policy Group.
A gas tax increase would ripple throughout the state’s economy in part by limiting the buying power of Maryland consumers.
“We found that the state would lose, based on lost consumption power, about 959 jobs,” said Sage economist Anirban Basu.
The report also cautions against raising taxes while the state and national economy remain weak.
“An increased gas tax would take place in the context of an economy already working to accommodate tax increases passed in recent years in other categories, including an expanded retail sales tax. Moreover, economic growth in Maryland remains slow, with the pace of job creation presently below the national average,” the report says.
As an alternative to the gas tax, AFP suggests Maryland consider higher tolls and adding high occupancy toll lines like the I-495 Express Lanes in Virginia. The report also suggests that Maryland consider increasing vehicle registration fees to bring in more transportation revenue.
Virginia is also considering changes to its gas tax. Virginia lawmakers are close to solidifying a deal that would eliminate the gas tax at the pump but increase the wholesale gas tax plus an increase in the retail sales tax to raise more money for transportation.