Many state coffers make millions when gas prices spike via sales tax at the pump

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Commenter to article about gas sales tax:

• "Commenter Freedombiz

"I think that is old info on just seven states. Looks more than 30.

• http://gasbuddy.com/Tax_Info.aspx"

3/25/11, "Calif. making $25 million a month from gas price spike," Orange County Register, Jan Norman

"California is one of seven states making millions of dollars more a month because of the recent spike in gasoline prices, reports the Tax Foundation, a Washington D.C. tax policy advocacy group.

The average American will pay $2,832 for gas this year, reports Register reporter Mary Ann Milbourn.

Every state charges excise tax on gasoline, the Tax Foundation says. But excise taxes are a flat rate per gallon, so taxes collected don’t change when gas prices fluctuate, the foundation says. In fact, tax revenues might decline as vehicle owners

• curtail their driving when prices rise.

But seven states, including California, also charge a sales tax on gasoline, which is based on the dollar amount of the transaction, so as the price of gasoline goes up,

• so do the tax revenues.

California’s sales tax rate on gasoline isn’t the highest in the nation, although its total taxes (including excise) on gasoline is the highest at 47.7 cents a gallon.

California charges 2.35% sales tax on gasoline and local governments add 0.1% to 1%. By comparison, Connecticut and Indiana charge 7% sales tax. Michigan charges 6%. The other states that charge sales tax on gas are Georgia, Hawaii, Illinois, New York and Virginia.

Orange County drivers are paying an average $3.995 a gallon for regular gas, 89 cents more than a year ago, according to AAA’s Daily Fuel Gauge Report. Although prices vary around the state, let’s use Orange County’s average to estimate how much more California is making a month

• (local governments that also add sales tax are making more too).

In November, 2010, the latest figures available, Californians bought 1.2 billion gallons of gas, according to the Board of Equalization. That could be different now as prices continue to climb. But using that volume,

• the state was collecting $87.42 million a month when gas was around $3.10
  

• and collected about $112.8 million a month at $4 a gallon.

That’s almost $25.4 million a month.

The Tax Foundation calculates that Indiana, with the highest sales tax rate, is making 5 cents more for every gallon purchased or

• $202 million in the past year."

via Free Republic