"Our top elected officials refuse to not only understand how this regressive tax impacts struggling Maryland families, but they also refuse to understand that Maryland is a small border state, and having the highest fuel taxes will only create incentives for people to fill up across state lines," said Change Maryland Chairman Larry Hogan. "Once again, politicians are wreaking havoc on entire industry sectors through the tax code, most notably convenience stores and delivery businesses."
If the legislature implements O'Malley's plan, sales taxes on fuel will likely ultimately rise to 6% and the current fuel tax will temporarily be reduced, only to rise again when pegged to the Consumer Price Index. Under that scenario, Maryland's fuel industry will be at a severe competitive disadvantage with surrounding states. Even under Virginia's recently-enacted plan, Maryland dealers will be charging 27.7 cents-per-gallon more due to fuel taxes than their southern neighbors when both plans are fully implemented. To fill up a 20-gallon tank will cost $5.54 more in Maryland than certain parts of Virginia assuming taxes are passed on directly to motorists. Even in northern
Virginia, with an existing 2% motor fuel tax, there is still a difference of 21.4 cents-per-gallon between the states.
Across the region, Maryland's fuel levies will cause the highest prices in the region. For gasoline, Maryland stations will be passing on 3.5 cents-per-gallon more than West Virginia; Pennsylvania 5.9 cents-per-gallon; the District 14.7 cents-per-gallon. In Delaware, a state without a general sales tax, gasoline will be 15.2 cents per gallon cheaper, creating further incentives for cross-border shopping. The prices are further distorted for diesel fuel, where Maryland prices will rise even higher.
"There will be more soccer moms buying clothes in Delaware, more commuters filling up in Virginia and more delivery businesses getting diesel in any of our neighboring states," said Hogan. "With this latest fuel tax proposal, O'Malley further validates the decision of thousands of taxpayers and their dollars to save money by leaving the state."
The Mid-Atlantic Petroleum Distributor's Association's figures do not project tying the existing fuel tax to the CPI, which could result in even greater disparities. Change Maryland has previously noted O'Malley’s tax-raising legacy which include 24 tax, fee and toll increases from 2007 that remove an additional $2.4 billion annually out of the pockets of struggling Marylanders.
Change Maryland expects to be releasing an updated tax, fee and toll increase list soon.
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