State House Sound Bites

Capitol reporter Katie Meyer covers Pennsylvania politics and issues at the Pennsylvania state capitol.

The State House Sound Bites Podcast is now called State of the State and is a part of PA Post, a digital-first, citizen-focused news organization to hold Pennsylvania’s government accountable to its citizens.

Gas prices to rise as final Act 89 tax hike takes effect

Written by Katie Meyer, Capitol Bureau Chief | Dec 13, 2016 12:21 AM

The January price change is the last step increase related to Act 89. (Photo by AP)

(Harrisburg) -- Pennsylvania's gas taxes are the highest in the country, but come January 1, people will be paying even more at the gas pump.

The levy is going up by about eight cents, to 58 cents per gallon.

The taxes are part of a "user fee" system -- meaning revenue from the tax and other fees directly fund maintenance of the commonwealth's extensive highways.

Before Act 89 was passed in 2013 under the Corbett Administration and a Republican-controlled legislature, it had stagnated, due in part to outdated tax caps that had been instated in the '80s. When taxes hit the ceiling, infrastructure projects were left underfunded.

The new law got rid of those caps, and most importantly, it instituted a new minimum wholesale price which, rather than setting the actual gas price (that still varies with gas markets) is used to calculate the tax. It increases in steps--in 2014 it was $1.87, right now it is $2.49, and come January 1, it'll be $2.99.

Jason Wagner is managing director of the Pennsylvania Highway Information Association, an organization that researches and lobbies for infrastructure investment. He said the minimum is vital for protecting the commonwealth from market volatility, becuase it keeps the tax amount stable even when actual prices rise and fall. 

Without that, "PennDOT might be funding a project and all of a sudden the price of gasoline goes way, way down on the market, and all of a sudden now they've got an infrastructure project that can't be completed," he said. "You'd have half-completed projects out there."

Published in News, State House Sound Bites

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