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By Hank Behar
The only difference between the long list of taxes on a cell phone bill and the price that’s paid for a gallon of gas is the visibility factor—the taxes added to a cell phone bill can be seen, but the fees and taxes paid at the pump are invisible, such as the 18.4 cents of federal excise taxes on a gallon of gasoline; the 24.4 cents on a gallon of diesel; and state levies for entities such as the Water Quality Assurance Trust Fund in Florida, the Underground Storage Tank Fund in Illinois, the Highway User Tax in Kentucky, and the Coastal and Inland Water and Groundwater Funds in Maine.
Seven states—California, Florida, Hawaii, Illinois, Indiana, Michigan and Georgia—also add state and local sales taxes, which is why its a cash cow that state legislatures love to milk whenever the budget needs boosting.
Georgia, however, can breathe easier this season. The governor, heeding the anguished cries of his constituents, issued an executive order June 2, which suspended the 2.9 cents per gallon tax increase that was to take effect July 1, keeping the state sales tax frozen at 11 cents per gallon. The order will remain in effect until the general assembly acts on it when it meets in January. It’s improbable that it will reverse the order.
Local sales and use taxes, however, which range up to 3 percent based on a retail price of $3.48 per gallon, are exempt from the order. Those can only be increased by local referendums, which seem unlikely.
Nevertheless, with 159 counties in the state, it is not unknown for a community to agree to an increase, since the revenues are usually earmarked for a specific purpose or limited in time.
New Jersey has one of the highest cigarette taxes in the nation at $2.57 a pack. The lowest state is South Carolina with a minuscule 7 cents—so low that the next lowest state, Missouri, more than doubles South Carolina’s rate with 17 cents a pack. The national average is $1.02.
However, a tax that low is too much of a temptation for lawmakers seeking new avenues of revenue—and, sure enough, the South Carolina state legislature earlier this year increased the tax to 57 cents a pack, with the money earmarked for an expansion of Medicaid.
But the governor vetoed the law, not because he disagreed with an increase in cigarette taxes, but because he wanted it tied to a cut in taxes elsewhere to pay for it. His veto was sustained with the help of the Speaker of the House, who opposed the bill on the grounds that the revenue raised should be assigned to the general fund rather than a government entitlement program such as Medicaid.
"Either way convenience stores lose because a tax increase on cigarettes is on both their agendas and that would drive business to neighboring Georgia and North Carolina, where the taxes are lower. (North Carolina’s tax is 35 cents and Georgia’s is 37 cents.) We can’t afford that because cigarette sales represent one of our highest sources of revenues, so we plan to work with legislators to prevent passage of proposals such as the one that was defeated last session," said Lee Faircloth, executive director of the South Carolina Association of Convenience Stores (SCACS).
South Carolina’s cigarette tax has been in place since 1977.
Although the next session of the Mississippi state legislature doesn’t begin until January 2009, Jerry Wilkerson, executive director of the Mississippi Petroleum Marketers and Convenience Store Association (MPMCSA) is getting ready now to present his case to allow the splash blending of ethanol.
"At the present time, the Big Oil companies are telling our members they have to accept pre-blended gasoline—that is, gasoline already blended with 10 percent ethanol," Wilkerson said. "We don’t think that’s fair because it means the oil companies, not the retailers, get the federal tax credit of 51 cents on each gallon of ethanol." On a pere gallon basis, that amounts to a 5.1 cent tax credit on each pre-blended gallon of gasoline sold to the public, he said.
"What we want is the chance to buy conventional gasoline so we can splash blend the ethanol ourselves. That will give retailers the tax credit, which they can pass on to consumers in the form of lower prices, something the oil companies are not likely to do. That’s why we’re going to sponsor legislation that will mandate the availability of conventional gasoline, just as North and South Carolina have done," he said.
However, it’s going to be a rough road to follow since it took an override of the governor’s veto to get the mandate passed in South Carolina, which is now being contested in the courts by BP. Big Oil is apparently going to erect as many barriers as possible to the practice of splash blending, according to Wilkerson.
"This is a big issue for us and the consumer since it could mean lower prices at the pump, so we at MPMCSA will be in Jackson, lobbying for the availability of conventional gasoline. It’s going to be an interesting session," Wilkerson said.
"There are no stronger advocates than convenience store owners when it comes to selling tobacco products only to those who are legally permitted to purchase them," said Ann Hines, executive vice president of the Arkansas Oil Marketers Association (AOMA).
"The problem is that sometimes an untrained employee will inadvertently sell a tobacco product to a minor without realizing it, and the owner then has to bear the brunt of the problems that follow. It's an untenable situation for many operators, and while 'WE CARD' is an excellent program, we needed one that would comply with the requirements of the Arkansas law."
AOMA developed a training program that specifically instructs employees on how to conduct tobacco sales in accordance with state law, which was approved by the state Tobacco Control Board, she said.
The approval means that any c-store conducting the program will receive only a warning from the state for its first two minor sales violations, which gives them a head start on curing any problems.
The training, which takes two hours, consists of an instructor's training manual, workbooks for employees, sample tests, forms and everything an employer needs to train employees.
Anyone interested in learning about the program can reach Hines at the AOMA office by calling (501) 374-6293.