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Pa. to uncap 30-year old oil tax to fix roads - abc27 WHTM

Pa. to uncap 30-year old oil tax to fix roads

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HARRISBURG, Pa. (WHTM) -

"I think the price of gas is high enough," said Chuck Warner of Lower Paxton Township Friday afternoon while gassing up his 4x4. "It's about $90 to fill it."

Warner and most Pennsylvanians have felt gas pains in recent years, but Chuck also winces at the condition of state's roadways.

"They need a lot of work," he said. "Some places I go, it's really rough."

But finding the money to fix Pennsylvania's crumbling roads and bridges is also a rough road to travel. Governor Tom Corbett's been criticized for not putting forth a transportation plan in his first two years. He's expected to deliver one on Thursday. He'll likely be criticized for whatever's in it. Such is the political road a governor travels in Harrisburg.

But to understand the centerpiece of Corbett's transportation plan, we must travel back 30 years to 1983. Ronald Reagan was president. Unemployment was over 9 percent, inflation over 7 percent. Cindy Lauper and the girls were just learning to have fun. And Pennsylvania lawmakers put a cap on the oil franchise tax. The wholesale price of oil would not be taxed above $1.25 a gallon.

Three decades later, with gas prices triple that, oil companies only pay tax on the first buck and a quarter. Corbett plans to remove the cap, let the taxes increase appropriately, and collect $1.85 billion for roads and bridge repairs.

The Corbett Administration will deny the t-word and vehemently insist that it's not a dreaded tax increase. They will argue it's more like the closing of a loophole that for years has allowed big oil to not pay adequate taxes.

That will be a tough sell, even though Democratic Governor Ed Rendell and Corbett's own transportation study recommended lifting the cap on the oil franchise tax.

"You can't generate $1-2 billion dollars in additional tax revenue and not call it a tax increase," said Nathan Benefield of the conservative Commonwealth Foundation. "Something needs to be done about roads. Whether we need more spending or whether we need to spend the money we have now better is up for debate."

That debate is coming. When the governor lays out his plan, he's expected to explain who's going to pay for fixing roads. Will it be oil companies? Gas stations? Consumers at the pump? A combination of all three? That's the likeliest scenario, but Corbett's not saying anything yet. He did call an Associated Press story suggesting gas stations are about to be taxed "wrong."

So details won't be announced until Thursday, but Chuck Warner says he's been down this road before.

"Someone said they'd add like two cents but it would only be the gas stations paying it and it wouldn't be passed on to the consumer," he said. "I don't believe that. I don't believe that in the least. You know who's gonna end up paying for it? The consumer, like everything else."

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