Motorists get ready for largest gas tax increase in 16 years

Drivers might see new meaning to “highway robbery” when they fill up their gas tanks on New Year's Day.

The state's gas tax increase is scheduled to kick in Jan. 1, bringing North Carolina's total gas tax to about 56 cents per gallon, the greatest increase in 16 years.

The tax breaks down as a flat 17.5 cents, another 7 percent based on the wholesale price of gasoline during the past six months, plus a 25-cent-per-gallon “inspection” tax. The new wholesale tax is estimated to be about 13.5 cents per gallon, an increase of 3 or 4 cents over the present tax. Most analysts quote the gas tax price as being 27.1 cents, but that does not include the so-called inspection tax.

Sen. Charles Albertson, a Democrat representing Lenoir County in the state Legislature, said his fellow senators haven't mentioned anything about capping the tax or reducing it. The Legislature is not due to reconvene until May, about two months before the second gas tax for 2006 is due July 1.

“We have about the most roads of any other state, except Texas, I think,” Albertson said. “We're way behind in road maintenance. You know, we used to be known as the good roads state. We still have people who are wanting more roads. It's tough.”

Proceeds from the tax are earmarked for building or improving urban loops, the state's intrastate highways, paving secondary roads and helping municipalities improve their streets. The Legislature has decreed that every resident in the state should live within 10 miles of a four-lane highway.

Republicans in the state House attempted to reduce the gas tax during the 2004 session, said Rep. Stephen LaRoque, who represents a portion of Lenoir County. House Democrats blocked the change, he said.

“I guess Democrats don't want to reduce taxes for the people of North Carolina,” LaRoque said.

North Carolina has the highest gas tax in the South and the fifth highest in the nation. Virginia's tax is 17 cents per gallon. South Carolina's is 16 cents. It is not clear whether either state has a tax comparable to North Carolina's inspection tax.

The present tax structure was conceived by state lawmakers in 1986 when the flat tax was set at 14 cents and the wholesale tax was 3 percent per gallon. In 1989, the flat tax jumped to 17 cents and the wholesale tax rose to 7 percent. In 1992, the flat tax became 17.5 cents. The wholesale tax stayed the same.

The road gas tax on Jan. 1, 2000 was 22 cents. It had risen to 27.1 cents by the last increase in July, or 5.1 cents in 5 ½ years.

The new increase is expected to be high because gas prices reached a record high this year. The six-month average for sweet crude, according to the federal government, was $64.20 per barrel between July 1 and Dec. 9, the latest date for which information was available.