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Senate Committee To Take Up Gas Tax Proposal

By Network Indiana

Posted January 16, 2012

Indiana's fuel tax rose from 18 cents to 28 cents last July.

A state Senate committee will take up a proposal to change the way Indiana calculates sales tax on gas.

The 7-percent sales tax is already rolled into the price consumers pay at the pump, but the gas station has to estimate how much of each shipment it is going to sell at what price, prepay the tax, then file more paperwork with the state to make up any difference.

Columbus Senator Greg Walker, an accountant for area Circle K stations and author of the bill, says it is a cumbersome and confusing process that increases the possibility of good-faith mistakes. His bill would have gas distributors collect the tax when they deliver shipments to local gas stations. Drivers would see no difference, and Walker says if everyone has been applying the state formula correctly, it should not make a difference in what the state collects, either.

"The retailer has to make those calculations and say, ‘Well, I‘ve paid about 80-percent maybe of what the formulary said would be ultimately due, and now I‘ve got to submit a tax return that takes that credit," he says.

But the state would reap some administrative savings by collecting taxes from 360 distributors instead of ten times that many gas stations. Instead of estimating the fluctuating pump price, the state would assess the tax on a per-gallon basis. The state would use a quarterly average price to translate that into a tax bill.

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