Indiana House Democrats Hope to Nix Gas Tax

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Indiana House Democrats Hope to Nix Gas Tax

INDIANAPOLIS -- The government's bodies here are up in arms over a cut on the state's gasoline sales tax. Democrats that want to cancel the tax control the House, while Republicans in support of the tax control the Senate, which may lead to a stalemate over the issue, the Courier-Journal reported.

The Republican Senate believes that it is unlikely the proposal will become a law. Removing gasoline from the state's 6 percent sales tax would cost the state nearly $300 million a year, while it would only save drivers minimal cents at the pump, the report stated.

House Democrats introduced the proposal when gasoline hit it peak prices of $3 a gallon in August, the report stated. At the time, eliminating the 6 percent sales tax would have saved drivers almost 16 cents per gallon when prices hit $3 per gallon. An average driver would save $150 per year, the report stated.

But prices have dropped since the proposal was introduced. According to AAA, the state's average price for regular unleaded gasoline is currently $2.21. For that price, drivers would save almost $125 per year, or 13 cents per gallon.

There's no telling what price gasoline could reach in the future, according to some Democrats. Gas prices could return to its highest peaks due to international instability, Democratic House speaker Pat Bauer told the newspaper.

"You shouldn't run your state on proceeds from gouging," Bauer told the Journal. "We want to see what we can do to help the average person." He added that if the tax was eliminated, consumers would spend less on driving costs, and in turn, spend more on other things.

Opponents believe there is no evidence that shows tax revenues increase when gas prices increase. When people pay more for gasoline, they spend less on other things, cancelling out any revenue gain for the state, Republican Governor Mitch Daniels told the paper.

"[The proposal] could be looked at," Republican Senator Luke Kenley told the Journal. Kenley, who is also the chairman of the Senate Tax and Fiscal Policy Committee, added "But I don't see that it's on the table right now at all."

Indiana is one of seven states to charge an additional sales tax on top of the excise tax.