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by ROM REDDY
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Before you all start sending me hate mail, let me say that I am all for giving South Carolina taxpayers relief from these soaring prices – but not through a gas tax suspension.
I must disagree with attorney general Alan Wilson and others who are calling for a gas tax suspension and I must further disagree with giving the governor unilateral authority on gas or any other tax as it violates the constitutional separation of powers.
As a businessman and ExxonMobil alumni who believes the state should be run like a business, there are better alternatives for helping the citizen responsibly.
In the last fiscal year , the gas tax brought in roughly $1 billion dollars for the year that is mostly allocated for infrastructure projects such as roads and bridges in the state.
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About one third of this billion dollars is paid by out of state individuals (and truckers) per the S.C. Department of Revenue. So a 120-day suspension will result in a $300 million revenue loss for the state – about $100 million of this will go to out-of-state entities and $200 million to S.C. taxpayers. Makes no sense.
Second, this tax suspension does not go directly to the taxpayer but must go through the retailer or gas station owner. The retailer or gas station owner no longer has to remit the 28 cent gas tax to the state. There is no requirement, however, for the retailer to pass the full amount of the reduction to the customer. In an environment of rapidly rising prices , the retailer can simply claim that the gas tax decrease was offset by higher gas prices. Last night, for example, gas price futures rose by 12 cents in one night.
Only a portion of the gas tax savings will likely get passed on to the consumer and the state has no way to monitor this.
Last but not least, how does the suspension end? On the 120th day, you can rest assured the retailer will raise prices by 28 cents even if he did not go down by 28 cents. What if gas prices are still high? Will we have the political will to reinstate the gas tax or will we continue to cut off funding for the roads?
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RELATED | DEBILITATING SURGE IN GAS PRICES CONTINUES
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In other words, we have the very real danger of tying the future of our roads to the future of the Strait of Hormuz or whatever geo-political event that keeps oil high.
Our politicians say – don’t worry about road funding. We will take it out of the surplus. Well here’s an idea. Why don’t you just rebate the surplus to the taxpayer right now? That way you are not giving a big break to out of state drivers and you are not risking the retailer not passing the lower taxes to the consumer fully. The taxpayer will see the full $ 300 million benefit immediately and the rebate all stays in state.
Most of our politicians have never run anything and are addicted to OPM ( other people’s money). The gas tax suspension is a half baked idea that will subsidize out of state drivers heavily, pad retailer profits, not fully help S.C. citizens and not have a good exit strategy. Long term, it risks damaging our already disastrous roads.
Stop the madness and rebate the surpluses directly if you are serious about helping.
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ABOUT THE AUTHOR…
Rom Reddy is a businessman from Isle of Palms, S.C.
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