A lower tax came in effect in April under a new financing plan for the state’s Department of Transportation. How does this help North Carolina’s economy?
Drivers will now see a relief at the gas pump, after a drop in motor fuel tax came into effect as part of a new statewide finance plan. As of April 1, gas tax in the Tarheel State dropped to 36 cents.
At 37.5 cents, North Carolina had the ninth highest gas tax in the country in 2014, according to The Tax Foundation. The 1.5-cent drop will also benefit the state’s Department of Transportation, as the declining price of wholesale gas would have pushed North Carolina’s fuel tax much lower.
“This bill will allow us to build roads, strengthen bridges and fix potholes so people can get to their jobs, go to school, see their doctors and drive to the mountains or the beach,” Gov. McCrory said in a press release. “We now have a gas tax that is based on North Carolina’s transportation needs instead of the unpredictability of the world oil market.”
The state’s fuel tax was correlated to this price before the ratification of Senate Bill 20, which ties the tax to population growth and energy costs. Legislative analysts say that without the ratification of the plan, the projected drop in gas tax would have cost the state $236 million next year.
A higher motor fuel tax makes North Carolina less competitive for small business than the state’s neighbors. In 2014, both South Carolina and Virginia gas taxes were less than half the North Carolina rate, while neighboring Tennessee was just above 21 cents that year.
