updated: 2/27/2007 8:25:03 AM

Indiana House Approves Bill to Cap Gasoline Sales Tax

InsideIndianaBusiness.com Report

The Indiana House has voted 75-25 to approve a bill that would suspend the state sales tax on gasoline if the price at the pump rises above $2.25 per gallon.

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House Bill 1622 would apply the state's six percent sales tax up to a total pump price of $2.25 or a total diesel pump price of $2.40 a gallon. The bill's fiscal impact is estimated to be between $37 million and $45 million.

The measure now goes to the Indiana Senate for consideration.

Source: Inside INdiana Business

Press Release

INDIANAPOLIS – Hoosier motorists and their families would get a break from high costs at the pump and save as much as $45 million each year, thanks to legislation authored by State Rep. Dennie Oxley (D-English) that was approved today in the Indiana House.

By a 75-25 margin, representatives passed House Bill 1622, which prevents the state from charging motorists a sales tax once the price for gasoline exceeds $2.25 per gallon or the price of diesel fuel goes over $2.40 a gallon.

“While this legislation is not everything I wanted, it does begin to get the state of Indiana out of the business of making a profit from gasoline price gouging,” Oxley said. “I would prefer to eliminate the sales tax on gasoline, but that is not feasible considering how uncertain our state’s economy is at this time.”

The bill itself specifies that the state cannot charge a sales tax on gasoline once the pre-tax gallon price exceeds $1.77. The state still will be able to charge a sales tax up until the price reaches that level. Oxley’s proposal would not affect either state or federal excise taxes or jeopardize any road funding.

“When those state and federal taxes are added to the pre-tax price of $1.77 per gallon, we reach the $2.25 per gallon price limit,” Oxley said. “Above that level, the state will no longer be able to charge a sales tax on gasoline.”

Oxley and other lawmakers first proposed elimination of the state sales tax last summer, when pump prices were on the verge of $3 per gallon. Indiana is one of only seven states in the country that charges a sales tax on gasoline.

“Too many drivers in Indiana are the mercy of gasoline prices that go up and down, seemingly at the whim of the oil companies,” Oxley said. “In recent weeks, the price of gasoline has ranged from as low as $1.75 to as high as $2.50 per gallon.

“Apart from having our attorney general investigate price gouging, there is little we can do to contain the oil companies and their greed, but there is something we can do to prevent the state from reaping excessive profits from this situation,” he continued.

“House Bill 1622 provides the best kind of tax relief for Hoosiers,” Oxley concluded. “It helps them when they are facing the highest prices and makes sure the state doesn’t profit from their difficulties.”

The measure now moves to the Indiana Senate for consideration.

Source: Indiana House Democratic Caucus

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