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Jill Long Thompson on suspending the gas sales tax

During a phone interview I had with Jill Long Thompson last year, she hammered Governor Daniels on the gas sales tax, urging him to suspend it during times of high fuel prices. Yesterday, she returned to that subject, holding a press conference in Indianapolis to discuss her plan for dealing with this problem in the future.

Niki Kelly of the Journal Gazette files this report:

Under Thompson’s plan, she would place a trigger in state law that would automatically suspend the sales tax on the portion of sales price exceeding $2.75 a gallon.

She said Hoosiers could see savings of about 3 cents a gallon, according to various models taking into account pricing and consumption. Indiana is one of only eight states that apply the state sales tax to gasoline, including Illinois, Michigan, Hawaii, Georgia and California. The sales tax is calculated before state and federal gas taxes of 36 cents are added to the price. House Democrats proposed a similar bill in the 2007 legislative session though the cap was at a lower price. It passed the Democratic House but never received a hearing in the Republican Senate.

Thompson said the program would not hurt highway construction because the sales tax money goes to the general fund, not roads. She also doesn’t believe the state would lose $100 million in revenue due to consumers spending their savings elsewhere in the economy.

Her opponent, Jim Schellinger, was asked his opinion of the proposal, and released this statement questioning whether the $100 million price tag would really bring about the lasting relief Hoosiers deserve:

"We all agree that the price of gasoline is out of control, but you can't balance the books based on one side of the ledger.

"For the past three years, we've lived under Washington-style budgeting, where Mitch Daniels claimed he was fiscally responsible even though he balanced the 2005 budget on the backs of schools, homeowners and local governments. His brand of piecemeal problem-solving, which he must have learned from George W. Bush, is what helped get us in this mess to begin with.

"Instead of merely addressing the surface issue of the sales tax on gasoline, we need to address the overall issue of rising fuel costs and what we can do to lower that burden on Hoosier working families and businesses.

It's also worth noting that the Long Thompson camp criticized the Schellinger Pick Up Indiana jobs plan last week for its $20-30 million price tag. Looking over the stories, I haven't yet found any real discussion of what a $100 million drop in revenue might mean for the state's coffers.

Posted by: Thomas


jlt is pandering with no real plans
she is desparate for attention as this race slips away from her...just like all her other races have done
the gas sales tax issue is worth looking at but i filled my tank today and it would have saved me a big $0.35.
let's see some real policy...she put out 2 pages on econ development and called it a plan...pathetic
i have been around dem politics for 3 decades...she is not what we need right now....some one just needs to tell her that

Seems to me like the last elected Democrat governor suspended the sales tax on gasoline when prices rose. Seems to me that he was heralded as a hero. Seems to me that the Democrats in the House of Representatives voted to approve a suspension of the sales tax on gasoline when the price reached a threshold. Seems to me they were heralded as ingenious. Are we all so biased that we judge a message by its messenger, rather than by its content?

If anything they should drop the sales and gas tax on diesel for the time being.

She's broken multiple scandals within Daniels' administration, and was the main reporter covering the Trident Air complaint against Schellinger.

I can't imagine who she would have bias for...

does anyone else see the glaring bias coming from the Fort Wayne Journal Gazette and specifically Niki Kelly? When you're the reporter most often cited on this blog, you might question your impartiality.

FYI - on norm's story. at the press conference jlt said the cap would be pre-tax price. and under that there would be no relief right now.

she later clarified her mistake to several print reporters who discovered the error. she meant pump price.

Not only does our current tax code wast billions of dollars, it is so easy to hide the graft when you really do not know the total taken in.


For every dollar spent, tax that dollar at the rate of 10 cents. The Federal Government should tax the same dollar at the rate of 20 cents. So what you then have is a FAIR TAX! Everybody pays the same. And every dollar will eventually get spent. And a one dollar item will cost you 1.30. But you will now get to keep your WHOLE CHECK!

Even more to the point is the stupidity of eliminating PART of a tax to save a few cents...

How much is it going to cost to reprogram every single gas pump and cash register to calculate sales tax on only part of a purchase?

This kind of silly gimmick is why our tax code is a nightmare of complex calculations that wastes billions of dollars worth of time!

JLT as a policy expert? Not according to Norman Cox of WRTV over at his blog.


"She plans to cap the tax at $2.75 a gallon. That’s the pure price of the fuel, before federal and state excise taxes and the sales tax are added on. Hoosiers would be charged the sales tax on anything up to that figure, and nothing over it. But if you take $2.75, then add in $.42 in excise taxes and $.19 in sales tax (7% of $2.75), it comes to $3.36, which is more than the price right now in the Indianapolis metro area. So drivers wouldn’t save anything right now. Of course, if the price rises dramatically this spring, as it seems to do almost every year anymore, you would save. If the price hits $4.00, your savings would be almost five cents a gallon.

Long Thompson also estimated the total price Hoosiers would save (based on $3.25 a gallon) at $100 million. As we’ve just shown, they wouldn’t save anything at that number. But even conceding her numbers are correct, that’s a big chunk out of the state treasury, especially at a time when tax receipts are consistently failing to hit their projected numbers because of the economic slowdown. But Long Thompson says that’s okay, because Hoosiers would turn right around and spend that, so the state would get it back on sales taxes on their new purchases. The only problem is that the state would only get $7 million, while the merchants would collect $93 million. And that’s assuming everybody spent their savings on taxable items. If they took their windfall to the grocery store and bought steak instead of hamburger, the state would get nothing. Basic tax math: if the state gives up 100% of something and gets back 7%, it doesn’t break even. And since sales tax money is a crucial element of the property tax relief going out to homeowners this year, it might not be such a good deal."

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