Everything We Know About the “Gas Tax”

There’s so much in this bill, it’ll take a truck to haul it!



The Senate’s bill raises gas/fuel tax by 12 cents per gallon

After much debate and maneuvering, the Senate finally passed its version of a gas tax increase. Its passage is being treated as a triumph for South Carolina’s roads and infrastructure.

Here are some details:

? Raises the gas tax by nearly 72 percent (from 16.75 cents to a total of 28.75 cents per gallon), with built-in automatic increases (up to 2 percent) tied to inflation.

? Converts the vehicle sales tax into an “infrastructure maintenance fee” for vehicles, motorcycles, trailers, and semi-trailers and doubles the cap from $300 to $600. The name change would permit revenue collected from the “fee” to be bonded by the STIB, since revenue from taxes can’t be (see below).

? Doubles the sales tax cap for boats, airplanes, etc. from $300 to $600.

? Doubles driver’s license fees from $12.50 to $25 for a five-year driver’s license. The ten-year license is shortened to an eight-year license, and the cost is raised from $25 to $40.

? increases car registration fees from $24 to $40 for individuals under the age of 65 who are not handicapped (handicapped and elderly individuals’ fees would be increased from $20 to $36). Further, the bill requires that $16 of registration and license fees be credited to the Infrastructure Maintenance Trust Fund.

? Creates a brand new fee for fuel-efficient cars. Those who drive electric or hydrogen-powered cars would pay a biennial fee of $120. Individuals who drive hybrids would pay a biennial fee of $60. According to lawmakers supporting these new fees, individuals who drive fuel-efficient cars are not paying their fair share for the privilege of using the roads.

? Replaces property taxes for large commercial vehicles with a road use fee, payable to DMV instead of DOR.

It’s important to note the actual definition of a fee in the code: “Service or user fee’ means a charge required to be paid in return for a particular government service or program made available to the payer that benefits the payer in some manner different from the members of the general public not paying the fee. ‘Service or user fee’ also includes ‘uniform service charges.’”

The State Transportation Infrastructure Bank can only use non-tax revenue to issue revenue bonds, and as a result of last year’s bond bill, DMV fees constitute a major funding source for the STIB.

For the “fee” revenue not directly appropriated to STIB, the bill creates the Infrastructure Maintenance Trust Fund to be funded in part by the tax and fee increases in the bill. Monies from the Infrastructure Maintenance Trust Fund may be directed to the State Highway Construction Debt Service Fund, which is used to pay “the principal and interest, as it comes due, on bonds issued for the construction or maintenance of state highways, or both.”

Tax “off-sets”

Legislators also included tax relief or off-sets in the bill.

? A $40 million tuition subsidy program in which college and tech school students would receive up to $2,750 apiece.

? A new motor fuel tax credit that, in order to receive it, would require the taxpayer to save (a) all gas receipts and (b) all receipts from “preventative maintenance” on a vehicle (defined as “new tires, oil changes, regular vehicle maintenance, and the like”). All this documentation would be sent to the Department of Revenue on forms the agency would create, and the taxpayer would be refunded his preventative maintenance cost, up to 150 percent of his or her gas tax cost. This off-set is so cumbersome and complicated that it’s hard to imagine very many people actually taking advantage of it. The credit is capped at $390 million for all taxpayers.

? Other offsets, including a small reduction in the manufacturing/business property tax.

DOT Reform

The majority of the DOT commission is appointed in exactly the same way: the governor “appoints” after lawmakers select their desired commissioner, and the Joint Transportation Review Committee finalizes the appointment. The bill would allow the governor to remove commissioners and adds one more commissioner to be directly appointed by the governor.

The bill adds that commissioners “shall represent the transportation needs of the State as a whole and may not subordinate the needs of the State to those of any particular area of the State.” Of course, the reason road funding is a contentious point in the first place is that the DOT commission doesn’t attend to the “needs of the State as a whole” but favors some districts and counties over others.

The bill passed the Senate with an overwhelmingly veto-proof majority and, if the House does not concur with what the Senate did, will go to conference committee next to be reconciled with the House version.

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