Local News

Gas Tax Increase Pains N.C. Drivers

Posted January 2, 2006

— Happy New Year! Gas prices are going up again. A 3-cent increase in the state gas tax is punching drivers in the pockets.

"Got to do nothing but roll with the punches," said driver Christopher Waters.

Hurricane Katrina is getting a second jab at North Carolina drivers. First, the storm knocked out a major supply line, sending pump prices soaring. Now that increase in the wholesale price of gas and diesel is affecting the state's fuel tax.

Twice a year, the state adjusts part of the tax, based on the average wholesale gas price. The latest adjustment means 3 cents more a gallon.

"They've been changing a lot all year -- what difference will it make anyway?" said driver Kimberly Joyner.

The tax increase translates into an extra $70 million in just six months for North Carolina road projects.

"No, I don't like it," said driver Otha Bryant. "I'm trying to save every penny these days."

The gas tax law was put into place in 1992. Since then, the 3-cent increase is the biggest on record. But there is hope.

"As we evaluate each six months, the history since 1992 has shown prices have decreased to some degree after having risen," said Reggie Hinton of the N.C. Department of Revenue.

That means gas prices and the state tax could drop by July. But for some drivers, it won't be soon enough.

"Whatever," said Joyner, "It's still too much for gas."

The tax increase is based on the wholesale price of gasoline from April to September. The next adjustment will be based on the price from October to March.

What will the hike mean for the state treasury? According to AAA, each penny added to the state's gas tax brings in $20 million during six months' time. That means the hike will raise $58 million by June 30. Seventy-five percent of that money goes to road maintenance, and the rest to new roads.


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