While gas prices have been dropping in recent weeks, the Commonwealth of Pennsylvania will be increasing the state gas tax by a few cents, starting Jan. 1.
The tax will increase by 3.5 cents for gas and 4.4 cents for diesel, according to the state Department of Transportation. The current tax is about 58 cents a gallon for gas and 74 cents a gallon for diesel.
The tax is assessed at the wholesale level, which does not mean that the increase will be passed along to consumers, PennDOT says.
However, Rebecca Oyler, president and CEO of the Pennsylvania Motor Truck Association, said it’s unrealistic to believe that those increased costs won’t be passed on to businesses and consumers in the end.
As of Friday, the average gallon of gas in Pennsylvania costs $3.61, according to AAA. The national average is $3.09 a gallon.
The Keystone State has the third-highest gas tax in the country, according to Kiplinger.
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Why is the gas tax increasing?
The increase is mandated by Act 89, which was passed by the General Assembly and signed into law by Gov. Tom Corbett, a decade ago, according to PennDOT.
A provision in the law sets the “floor” of the wholesale gas price at $2.99, PennDOT says. If the price remains above this level for 12 months, the fuel tax rate increases. The average wholesale price is now $3.17.
“This is the first time that this has happened since the law went into effect,” said Alexis Campbell, a spokeswoman for PennDOT.
Because the mandatory increase is required by law, the legislature would need to address any fix.
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Will the legislature address the rise in gas tax?
Newly elected state Rep. Joe D’Orsie, R-Manchester, called the impending gas tax increase unwelcome news, saying it will take more money away from hard-working Pennsylvanians, according to a news release
He proposes capping the state’s gas tax and has been circulating a co-sponsorship memo for fellow House members to sign, the release states. D’Orsie plans to introduce a bill after he is sworn into office in January.
“In inflationary times, we should be protecting consumers at the gas pump, not penalizing them,” D’Orsie said in the news release. “Increases like these always have a trickle-down effect; not only will gas prices rise if we don’t act, but the cost of the goods transported by trucks dependent on diesel fuel will follow suit.”
The price of diesel is the No. 1 issue for trucking companies this year, Oyler said. The cost is up almost 50 percent over last year. The gas tax increase “adds fuel to the proverbial fire.”
“The record-high cost of diesel this year is already contributing to increasing costs for consumer goods across the board,” she said in an email. “From food to pharmaceuticals to the Christmas tree in your house and the presents under it – all of these items have been on a truck at some point. Most of them several times. When the cost of each of these journeys on a truck increases, so does the cost of the final product.”
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Will the increase help with road and bridge projects?
The gas tax helps to pay for road and bridge projects, but it will not result more construction work.
Although wholesale prices have gone up, fuel consumption has decreased over time, PennDOT says.
“This is another example of why Pennsylvania’s gas tax is an unreliable source for funding the commonwealth’s vast network of roads and bridges,” Campbell said.
Gov. Tom Wolf has supported phasing out the gas tax because it’s a burden on Pennsylvanians, PennDOT says.
He encourages the General Assembly to look for alternative funding sources that can replace the gas tax, repair the aging infrastructure and set the state up for success in the 21st century.
