Over the past few weeks the State of Ohio has considered raising the tax on gas. Originally proposed by Governor DeWine in late February to increase 18 cents per gallon in one year and then increase each year after that with inflation as a part of his transportation budget. The proposed budget then went to the Ohio House of Representatives where the tax was lowered from an 18 cent per gallon increase to increase 7 cents per gallon this year and then 3.7 cents per gallon the year after and would not be indexed to inflation. Then this past Friday the Ohio Senate passed a tax that only increases the gas tax by 6 cents per gallon. The two chambers must now work out the differences between the two bills before the end of March. This tax will now make the cost of gas higher and as such we may see that commuters seek other means of public transportation when possible. So those going on long distance trips may not fill up as much and may choose to fly out of CMH, CVG, or Hopkins. Those in urban areas may choose public transportation instead of driving. We will see how this affects the transportation choices of Ohio Commuters.
https://www.cleveland.com/open/2019/03/ohio-senate-passes-6-cents-a-gallon-gas-tax-increase.html
4 comments:
It looks like the state government is trying to increase its government revenue. Is it because the crude oil's price is increased or the government is trying to encourage people to use the new energy vehicles or just simply to protect environment ? I agree with Greg to see how the consumers will change their behavior with this new policy.
This tax should worry oil companies as Ohio residents are not happy about this issue. It can be assumed that the rise in gas prices will lead to a lower demand for oil. This in turn will lower lower revenue for oil companies.
Moreover, I see this causing issues for residents who make the switch to public transportation especially in rural area of Ohioi. Even Columbus has limited public transportation options which may negatively impact residents. This may leave lower income individuals with extremely high travel cost.
In response to Yongzhao I would say that the move is to increase revenue in an effort to improve the state's roads and infrastructure. Ohio's gas tax is much lower than surrounding states, so with upcoming infrastructure needs the state felt this was an opportune time with the presentation of a new two year budget.
I would contend that this tax will have little impact on the amount of gas purchased. I don't see that market as being very elastic at this time. I would agree with Jared that Ohioans don't have much of a choice considering public transportation is fairly lacking in the state. I think it will be very interesting to see how much of a tax is ultimately approved by the Ohio legislature.
I would definitely agree with Will's point about the intent of this law. Governor DeWine has repeatedly said that this increase is necessary to not just improve infrastructure but to keep it from crumbling. In regards to the point about energy prices I do believe that the relatively low prices of oil we've seen for the past few years definitely provide more political cover than if this was done back when gas was $4.50 a gallon. I would disagree that this is done to try and get residents to use green vehicles, in fact one of the proposals from the House actually created an annual electric car fee fro Ohioans who drive electric vehicles. I don't think oil companies will be terribly worried but it will certainly be tough for some consumers. I would definitely that rural areas will feel the brunt of this measure as they have less transportation options than those in Franklin, Hamilton, and Cuyahoga counties. I agree with Will that seeing how the unified budget ends up being will be extremely interesting as both of the House and Senate Finance Committee Chairs, Oelslager and Dolan are considered as part of the moderate wing of the GOP controlled chambers.
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