Would pausing NC’s gas tax lower prices? Industry leader says no

For every gallon of gas pumped in the State of North Carolina, nearly 60 cents is collected for federal and state level taxes. North Carolina collects 41 cents and federally, 18.4 cents is collected. 

After the fuel price spikes due to the conflict in Iran, we raised the question to leaders about if a temporary waiver on the gas tax is feasible.

“Our response would be no,” Gray Harris, Executive Director of the North Carolina Petroleum & Convenience Marketers, said. “If you decide to pass that law, every motorist in the state is going to expect the price of gasoline to drop by 60 cents the next day when they get up. It will not happen because the price will change, possibly twice, before that even occurs.”

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Because the fuel tax goes towards funding road maintenance and construction projects, Harris feels a moratorium, even temporarily, would do more harm than good.

“There are a lot of needs for roads and highways right now,” Harris said. “If you take that away, then the state’s going to have to look for an alternative source of income so your taxes are going to be grabbed some place else.”

On Thursday, a spokesperson from the North Carolina Department of Transportation released a statement.

“The state motor fuels tax is determined annually through a formula established by state law,” the spokesperson wrote. “It funds highway and other transportation construction projects and the maintenance and operations of our transportation systems.

“The state motor fuel tax produces about 40% of all state-generated transportation revenue.”

Harris said other states have implemented a temporary moratorium on gas taxes to combat the higher prices consumers are facing.

“Georgia and Kentucky have suspended motor fuel taxes,” Harris said. “It creates a tremendous logistical problem internally to calculate and break out if you take that tax off.”

Harris says he’s hearing from gas stations that they’re seeing an impact too.

“We make much more margin on cheap gas prices than we do on tight prices,” Harris said. “Crude is driving everything up so the guy across the street will not go up on his price and I can’t so I’m squeezed on margin and it gets tougher and tougher for us to make money on fuel.”