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Maryland fuel tax on the way up …waaaaay up

Gov. Martin O’Malley signed a bill into law on Thursday, May 16, which could result in truckers and other drivers in Maryland paying about twice as much in state taxes at the fuel pump.

The governor signed a six-year, $4.4 billion transportation funding plan. The effort is touted to address a lack of new highway construction money available after 2017.

Initiated by the governor, HB1515 is expected to raise about $830 million annually for state and local road, bridge and transit work.

O’Malley said that the transportation bill will allow the state to continue to be competitive at attracting companies to invest, grow and create jobs.

“We have guaranteed a sustainable transportation funding source that will support more than 57,200 jobs, create a safer, more efficient transportation network, and spur economic development,” O’Malley said in released remarks.

Starting July 1, new revenue will be generated through a 1 percent sales tax applied to fuel purchases at the wholesale level. The change is expected to equate to a 3.8-cent-per-gallon rate increase for gas and diesel.

The sales tax rate will later rise to at least 3 percent. The tax will increase to 5 percent if Congress fails to act on legislation allowing states to tax Internet sales.

In addition, the state’s 23.5-cent-per-gallon excise tax on gas and 24.25-cent tax on diesel will be indexed to inflation, which allows for regular increases. The tax rate has remained unchanged since 1992.

When the taxes are fully implemented in 2017, state estimates show that the price at the pump will be about 40 cents per gallon – about 16 cents higher than the current rates.

If the Internet tax isn’t approved by federal lawmakers, the state’s tax rates will increase another 8 cents to nearly 48 cents per gallon.

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