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CPBJ Extra Blog

Of transportation and taxes

By , - Last modified: January 22, 2013 at 9:25 AM
Tim Stuhldreher
Tim Stuhldreher

So, it appears Gov. Tom Corbett will finally reveal his plan to fix Pennsylvania's transportation infrastructure.

Corbett is expected to ask the legislature this Thursday to lift the cap on the oil company franchise tax, the Associated Press reported last week.

As the Pittsburgh Post-Gazette noted, the tax applies to the first $1.25 per gallon of wholesale gasoline. The rest of the price is exempt. The annual average wholesale price is $3.114, the Post-Gazette said, citing the state Revenue Department.

It's been more than a year since Corbett's Transportation Funding Advisory Commission recommended gradually uncapping the tax, which it did as part of a report released in August 2011.

Lifting the cap completely would add $1.85 billion a year to the $1.3 billion the tax generates at present, the Pennsylvania Highway Information Association determined. That's somewhat higher than the $1.36 billion the governor's commission calculated.

Pennsylvania's gas tax is the 15th highest in the nation, according to the American Petroleum Institute. Pennsylvania imposes a 12-cent excise tax and 20.3 cents in "other taxes," which include the oil company franchise tax, API said. (The Tax Foundation has a map ranking Pennsylvania's gas taxes seventh highest, citing API as the source; API did not return my call seeking to resolve the discrepancy.)

New York has the nation's highest gas taxes, 18.3 cents per gallon higher than Pennsylvania's, according to API.

Uncapping the tax would raise the effective rate on distributors from 19.2 cents per gallon to 47.7 cents, a hike of 28.5 cents, the Pennsylvania Highway Information Association calculated. It appears to me that would make Pennsylvania's gas tax the highest in the country, but PHIA Managing Director Jason Wagner cautioned me that distributors will almost certainly not pass the whole tax through to consumers.

"The truth lies between zero cents and 28.5 cents," he said.

Corbett claims he is not violating Grover Norquist's "no tax hikes" pledge by uncapping the tax. Uncapping a tax is not the same as raising the rate, his administration argues.

R-i-i-i-ght. And if you make a natural-gas severance tax complicated enough, it's not a tax, it's an "impact fee."

I hope no one is convinced by such semantic niceties. (Norquist's organization certainly isn't!) Bottom line: If you pay more in taxes for the same quantity of something, it's a tax hike, no matter how you slice it.

That said, everyone who has looked into the matter says the state's roads are in terrible shape, and getting worse. The business leaders and local government officials I interviewed for my Jan. 11 story on transportation all endorsed the recommendation of the governor's commission, uncapped tax and all. I can't think when I last heard such unanimity of opinion on any issue more controversial than "the sky is blue."

Tax hikes aren't fun, but some are necessary. This appears to be one of them. It's a pity the Corbett administration can't bring itself to say so.

Tim Stuhldreher covers banking, finance, energy and environment. Have a tip or question for him? Email him at You can also follow him on Twitter, @timstuhldreher.

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