LIHU‘E — The Tax Foundation reports Hawai‘i is one of nine U.S. states that siphons off more tax revenue when gas prices rise. The federal government and each state imposes a tax on gasoline at a fixed number, meaning tax
LIHU‘E — The Tax Foundation reports Hawai‘i is one of nine U.S. states that siphons off more tax revenue when gas prices rise.
The federal government and each state imposes a tax on gasoline at a fixed number, meaning tax revenues for fuel are based upon quantities used rather than prices paid.
However, the Tax Foundation, a nonprofit organization that monitors fiscal policy, said some states, including Hawai‘i, practice “double taxation” on gas purchases by tacking on additional price-dependent sales taxes or similar percentage-based taxes, thereby increasing state revenues as gas prices climb.
For every gallon of gas purchased, Hawai‘i drivers are taxed a total of five times: federal fuel tax of 18 cents per gallon; state fuel tax of 17 cents per gallon; Environmental Response, Energy & Food Security tax of $1.05 per barrel; county taxes ranging between 8.8 and 16.5 cents per gallon; and a state gross income tax for distributors of 4.17 percent that is then passed on to consumers as general excise tax.
Other states that double tax on gas include: California, Connecticut, Georgia, Illinois, Indiana, Michigan, New York and Virginia. The Tax Foundation said Illinois leads the pack with a 9.25 percent sales tax, with proceeds split between state and local governments. The state of Hawai‘i does not directly allocate general excise tax revenues to counties but rather uses the funds to balance its state budget.
Nationally, fuel prices have increased an average of 75 cents per gallon over the last year, with the greatest gains occuring within the last six months.
Hawaiigasprices.com indicates Hawai‘i currently has the highest gasoline prices in the country at $4.25 per gallon, based upon national metro-area averages. Hawai‘i’s fuel prices have increased 10 cents per gallon during the last week alone.
Kaua‘i’s gas prices averaged $4.28 last week, up 72 cents or 20 percent compared to the same period last year. A Hawai‘i Department of Business and Economic Development report said Kaua‘i used 35.65 million gallons of gas in 2007.
• Vanessa Van Voorhis, staff writer, can be reached at 245-3681 (ext. 251) or by emailing vvanvoorhis@ thegardenisland.com.
HAWAI‘I GASOLINE TAX* TOTAL
State of Hawai‘i 17.0 —
Statewide EREFS** tax 2.5 —
Honolulu County 16.5 36.0
Maui County 16.0 35.5
Hawai‘i County 8.8 28.3
Kaua‘i County 13.0 32.5
*Cents per gallon
**Environmental Response, Energy & Food Security tax of $1.05per barrel at 42 gallons per barrel equals 2.5 cents pergallon
March 25, 2011
Average price per gallon $4.28
Federal fuel tax $0.18
State GE tax 4.16% $0.17
State fuel tax $0.17
County fuel tax $0.13
Statewide EREFS* tax $0.03
Taxes = $0.68 (16%) of cost per gallon
*Environmental Response, Energy & Food SecurityTax
