Maryland gas prices are set to rise Friday due to a 2013 law stating fuel taxes must automatically increase with rising inflation.
The mandate, which will take effect July 1, will bring the state tax to 43 cents per gallon. The state tax hike will come in addition to the 18 cents per gallon charged by the federal government.
Maryland officials have expressed dismay at the rising cost of fuel and advised lawmakers to institute a temporary suspension of fuel taxes, often called a tax “holiday.”
Comptroller Peter Franchot, a Democrat running for governor, said the rising prices are a sign of a serious economic downturn and immediate action is necessary to lessen the impact.
“We’re definitely going to have at least a mild recession,” said Franchot at a news conference in Hyattsville on Monday. “But we have a solution to that. It’s called a gas tax holiday.”
Franchot proposed a three-month fuel tax suspension that would cost the state $200-300 million. The money to support the holiday would come from the state’s Transportation Trust Fund, which is used for infrastructure projects. Franchot held that the state can afford the costs.
“We have plenty of money. We are just lacking the political consensus to do the right thing,” Franchot said.
Franchot’s plan would require the Maryland General Assembly to convene for a special session. However, Democratic leaders in the legislature contend that the tax holiday would be an untenable financial hit to the state’s infrastructure projects and would not substantially reduce consumer prices at the pump.
“States cannot unilaterally bear the burden of increased gas prices driven in part by Putin’s aggression in Ukraine and in part by the corporate greed of oil companies bringing in record profits,” wrote Senate President Bill Ferguson and Speaker Adrienne Jones in a joint statement on June 22.
Please see my joint statement with @SpeakerAJones regarding Maryland’s gas tax. pic.twitter.com/hmcjUtII6k
— Bill Ferguson (@SenBillFerg) June 22, 2022
Ferguson and Jones’ statement was in response to Governor Larry Hogan, who called on Franchot and state legislators to take immediate action to provide relief before the July 4th weekend.
Nearly 100 days ago, Maryland became the first state to suspend the gas tax & we proved that it can be done successfully. We are again calling on the Comptroller and the General Assembly to take action, and I am prepared to swiftly sign a gas tax suspension.
My full statement: pic.twitter.com/83WioQp5yE
— Governor Larry Hogan (@GovLarryHogan) June 22, 2022
Maryland successfully implemented a fuel tax holiday in March, becoming the first state in the nation to do so in response to the war in Ukraine. The holiday came after failed attempts made by Republican lawmakers to repeal the 2013 law. Other failed attempts to repeal the law were made in 2015.
On June 22, President Joe Biden called on Congress to implement a three-month fuel tax suspension. Opponents of the proposal argued the holiday would do little to relieve consumers and would increase fuel demand, driving prices up again. Like Ferguson and Jones, federal legislators are also wary of taking away funds from infrastructure projects.
