Gas Taxes May Be Ripe For Ax

Several States Considering At Least Temporary Relief For Motorists

(AP)  The gas tax is the most widespread target as constituent anger grows over gas prices, but it's not the only measure being considered.

California zeroed in on oil companies when a key legislative committee approved a windfall profits tax aimed at oil producers. Several state attorneys general have begun investigations into price-gouging, and governors in California and Maryland have asked state officials to examine potential gouging.

"We actually established a hot line and asked consumers to call," said Kentucky Attorney General Greg Stumbo, a Democrat who has sent out 43 subpoenas to petroleum companies, wholesalers and retail gasoline. "As the price fluctuates rapidly, as it increases rapidly we get more calls" - more than 600 so far, he said.

But as prices in many parts of the country top $3 for a gallon of gas, states are looking hard at the one part of that cost they can control - the state tax.

On average, states add 28.1 cents to each gallon of gas from a combination of excise taxes, business taxes and state and local sales taxes. It varies from a low of 8 cents in Alaska to a high of 49.5 cents in New York, according to the American Petroleum Institute.

The federal government adds 18.4 cents to each gallon.

"It's very easy to point the finger of blame at the oil companies," said Pete Sepp at the National Taxpayers Union, which supports the cuts. "But government is making a killing on these high prices, too."

In South Carolina, Sanford estimates a three-month tax suspension would save a family $63. It would cost the state $134 million.

But consumers might have a hard time noticing any savings at the pump, especially if prices keep rising, experts said.

That's because retailers pay the tax when they buy gas from their distributor, and prices, as everyone has seen, can change quickly, said Rayola Dougher, manager of energy market issues for the American Petroleum Institute. So a spike in oil prices could easily swallow up a break from the state. Besides, prices often vary a few cents from station to station.

A small tax cut like the one being considered in New York, which would be at least 4 cents, would be hard to see in day-to-day price shifts. A bigger cut like South Carolina's 16.8 cents would be easier to notice, depending on the price of crude, Dougher said.

"The prices have been changing a lot harder and faster than 4 cents these days," Dougher said. "If you get up to 15, 20, 30 cents, sure, you're going to see it. But it's going to be hard to see four for all the noise."

Others argue it's a misguided step for bigger reasons like the nation's dependency on oil or the impact of fossil fuels on the environment.

"Cutting the gas tax is a false solution. I don't think the public is fooled," said Rob Sargent, energy analyst with the environmental coalition called the State PIRGs. "It just delays the inevitable - dealing with the bigger problem - and that is our overreliance on oil."