Pa. Lawmaker Proposes Lowering State Liquid Fuels Tax Amid Rising Gas Prices

‘This offers a win-win for Pennsylvania families — lower prices at the pump in the short run and better roads and bridges to drive on in the years ahead,’ Senate President Pro Tempore Jake Corman, R-Centre, said

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Gas prices in Warren as of March 10, 2022. Pa. Senate President Pro-Tempore Jake Corman has proposed a reduction in the state's liquid fuels tax to help combat rising gas prices as the average price of a gallon of regular unleaded has risen more than 50 cents in the last week, according to AAA. Photo by Brian Hagberg.

by Marley Parish, Pennsylvania Capital-Star

Pennsylvania’s highest-ranking Senate Republican proposed lowering the state’s liquid fuels tax by a third through the end of the year with the hope of providing relief as prices rise.

On Wednesday, Senate President Pro Tempore Jake Corman, R-Centre, said he’d pay for the tax reduction by using $500 million in federal American Rescue Plan funds to prop up the budget of the Pennsylvania State Police, whose budget partly comes from an account funded by the tax. The proposal also calls for a $650 million bond from the Pennsylvania Department of Transportation to pay for critical infrastructure projects during the tax holiday.

States have some flexibility for spending American Rescue Plan funding, but the money cannot be used as offsets of a reduction in net tax revenue, according to guidelines from the U.S. Treasury. The relief dollars also cannot be used for debt service or to replenish a rainy day fund. And “extraordinary contributions” to pension funds are prohibited.

“This offers a win-win for Pennsylvania families — lower prices at the pump in the short run and better roads and bridges to drive on in the years ahead,” Corman said in a statement. “It also buys critical time for lawmakers to determine how we can best meet our long-term infrastructure needs without relying so heavily on the gas tax in the future.”

President Joe Biden — responding to Russia’s attack on Ukraine — announced a ban on Russian oil imports, saying: “Defending freedom is going to cost.”

And that cost is already being felt at the gas pump, which has hit record-breaking numbers and surged since Russia’s attack on Ukraine. As of Wednesday, the average cost for a gallon of regular fuel has reached $4.252, according to the American Automobile Association. That’s up more than a dollar since 2021.

In Pennsylvania, the average cost is $4.39 per gallon of regular fuel.

Corman, a Republican candidate for governor, announced plans for the legislation Wednesday in a memo seeking support from colleagues. The proposal came one day after Gov. Tom Wolf joined a coalition of chief executives across four states calling for Congress to pass legislation that would suspend the federal gas tax until the end of the year.

“Like most Americans, Pennsylvanians are grappling with rising gas prices as they navigate paying for other household needs, from their rent or mortgage, to groceries and other necessities,” Wolf said in a statement. “A federal gas tax holiday would ease some of that pain on Pennsylvanians’ wallets without impacting important infrastructure projects that are funded through the federal Highway Trust Fund.”

Elizabeth Rementer, a spokesperson for Wolf, told the Capital-Star in an email that the administration “recognizes that increasing gas prices have an impact on all Pennsylvanians, especially those who are struggling.” She referenced the governors’ letter to Congress and referenced Wolf’s budget proposal as possible ways to provide direct relief to those in need.

“As far as a state gas tax holiday, it’s important to note that our gas tax is tied to funding fixing our roads and bridges through the Motor License Fund, and that funding is critical to ensuring the strength of our infrastructure,” she said, adding that the administration will review Corman’s bill once it’s introduced.

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