A Senate amendment from Indiana would continue the yearly 1-cent gas tax rise

Indianapolis, Indiana – The annual one-cent rise in the state’s gas tax may be extended by Indiana legislators.

A bill enabling a gas tax rise of up to one cent each year from 2018 through 2024 was passed in Indiana in 2017. But as of right now, a change made to House Bill 1050 last week would allow for an additional year of growth, until 2025.

The current state gas tax in Indiana is 52 cents per gallon. This includes a sales tax based on the Hoosier State’s typical gas price. The price varies every month.

“We’ll kind of probably see that go up, typically between now and say, peak summer prices, they tend to rise about 5%,” explained Kyle Anderson, an economist at the IU Kelley School of Business.

In addition to the sales tax, Indiana levies a 33 cent per gallon gas excise tax. A penny has been added to that tax since 2018 in accordance with current Indiana law. On July 1, 2024, the last increment would take effect.

Nevertheless, the latest amendment passed on the Senate floor allows for the delay of such rise until 2025.

According to state figures, the annual penny hike brings in about $30 million in income.

The amendment was proposed by Greenfield-based state senator Michael Crider (R). It is intended to close a gap before the next state budget and give lawmakers more time to determine the need for road financing, according to a message sent late on Tuesday afternoon by Crider.

Crider notes that the budget bill establishes a task force on road funding to concentrate on the problem and take into account the effects of levies from alternative fuel vehicles, which is a focus of House Bill 1050.

“The task force will examine our road funding needs factoring in the impact alternative fuel vehicles will have on our road funding formula and it takes us to the next budget cycle,” Crider said.

State Rep. Jim Pressel (R-Rolling Prairie), the bill’s originator in the House, expressed uncertainty about whether such provision will remain in the measure.

He continued by saying that he thought the present gas tax structure was doing a good job.

“How the indexing portion works and the way sales tax and the excise tax are working, we are really keeping pace with where we’re at inflation-wise,” Pressel said.

State Representative Greg Porter (D-Indianapolis) stated that he is opposed to continuing the yearly hike.

“We’re sitting around a $4 billion surplus right now,” Porter said.

Porter has criticized the gas tax and contends that it need comprehensive change.

“I don’t understand why we want to continue to pile on Hoosiers by saddling them with more taxes,” Porter said. “I don’t care that it’s only one penny.”

The conference committee process for the bill is now underway. The House and Senate will meet to negotiate the final text of the bill, which will then be considered by both chambers.