The Hippo


Jun 22, 2018








Latest budget issue is a gas
Would temporary tax reduction really help?


Whereas House lawmakers’ budget proposals got all the attention in the previous month or so, a proposal to reduce the state’s gas tax by 5 cents has garnered most of the attention in recent weeks. And the proposal would reduce the tax only until July.

In the face of ever-rising gas prices, no one’s going to dispute that fuel costs are a problem. But is dropping the 18-cent-per-gallon gas tax by 5 cents really worth what it would cost the state in road and bridge repairs? New Hampshire currently has the lowest gas tax in New England at 18 cents per gallon. The gas tax hasn’t changed in New Hampshire since 1991, not that there haven’t been proposals to raise it.

House Speaker William O’Brien, R-Mont Vernon, said gas prices have been the number-one concern of his constituents, which is why, he said, the House made the proposal.

“This bill is good for our economy and will give welcome relief to the drivers of the state who are facing soaring gas prices,” O’Brien said in a statement.

O’Brien even said people in his Mont Vernon district aren’t “overly focused” on the state budget, among other items, but rather are focused on gas prices.

“We are hoping that by July, we’ll see gasoline prices drop back down to a more reasonable level,” O’Brien said in the statement.
Gas prices do typically rise between February and Memorial Day.

While supporters say the proposal would present a small savings to consumers, it would be costly with regard to road and bridge repairs. Officials say the move will cost the state highway fund as much as $7 million. In that $7 million is $840,000 slated to help cities and towns make repairs to roads and bridges.

A gimmick?
It’s a small savings — no one is saying it’s more than that. So then what’s the point? This moved has been called a gimmick. It’s been said it won’t have any impact.

Gov. John Lynch called the tax reduction a gimmick after the House voted 201-108 to approve the two-month, 5-cent tax hiatus last week. Reports indicate the proposal’s future is less certain in the Senate, which already killed a 10-cent reduction in the cigarette tax.

So maybe it’s all about the message it sends. House Majority Leader D.J. Bettencourt said as much in a statement last week.

“My hope is this also sends a clear message to those who elected us that Republicans in Concord are doing everything we can to cut taxes and spending, drive the economy, and put more money back into the pockets of our working families,” Bettencourt said.
Arnie Arnesen, host of the talk show Political Chowder, said the gas tax proposal was just a distraction. She went further, though, saying the tax cut was undermining the future of the state to score political points. She even went so far as to say the move was immoral.

“What is [O’Brien’s] compass?” Arnesen said. “Which direction is it going?”

Ideologically, you can go around in circles on the House’s budget priorities and other fiscal proposals, but it’s clear that much of what the House leadership is doing is aimed at shifting the playing field. Instead of trying to find ways to fund everything that’s been in the state budget, House lawmakers are trying to find ways to spend less. But residents want tangible change when it comes to the government spending less. It’s difficult to see how this proposal provides that tangible change, based on what officials are saying.

Volatility at the pump
“How can you tell?” Arnesen asked.

Opponents pointed to the volatility in the gas prices. They figured any savings would be gobbled up by oil companies rather than regular Granite Staters. (Maybe that’s why the state hasn’t changed the tax in so long.)

Charles Arlinghaus, president of the Josiah Bartlett Center for Public Policy,  said the same thing. He told WBZ the move wouldn’t ultimately put any money back in consumers’ pockets. In fact, he said it would have practically no effect.

“The problem here is there’s no obligation on the gas companies to actually share that revenue with consumers,” Arnesen said.

Crossing state lines
There’s the now-repeated line that cutting the tax, even just 5 cents, will bring motorists from other states into New Hampshire to buy their gas. House lawmakers used the same rhetoric with regard to the cigarette tax cut.

Bettencourt said gas prices are already about 5 cents lower in New Hampshire than they are in Maine and about 10 cents lower than pump prices in Massachusetts. His thinking is — in tandem with the idea that people would drive across the border for lower prices — that visitors to the state would not only fuel up but they’d also buy other goods, including taxable items like cigarettes, liquor and lottery tickets.

“This will help to drive up state revenues, as will the business profits taxes of the local gas stations benefiting from the additional business,” Bettencourt said last week.

Would those visitors to the state already be here regardless of the gas tax or will there really be lots of people crossing the border for gas? The Senate didn’t buy the argument with regard to a small cigarette tax cut.

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