Published: April 03, 2008 08:59 pm            

Consider a flat tax

Gubernatorial candidate Jill Long Thompson went back to the future Tuesday.

The former Fort Wayne-area congresswoman, who’s campaigning against Indy architect Jim Schellinger for the Democratic nomination, modified a plan former Gov. Frank O’Bannon implemented in 2000.

Almost eight years ago, O’Bannon suspended the state sales tax on gasoline after the price of regular unleaded hit $1.88. That suspension wasn’t lifted until September.

Long Thompson proposed Tuesday capping the sales tax on gas when prices rise above $2.75 a gallon. Her plan came the same day the state sales tax increased from 6 percent to 7 percent.

“That would be a benefit to families who are facing difficult economic times,” Long Thompson was quoted as saying Tuesday. Most drivers likely wouldn’t argue the point.

In August 2006, when state Democrats proposed suspending the sales tax on gasoline after pump prices rose to $3 a gallon, then-House Minority Leader and present House Speaker Pat Bauer said Indiana had collected about $156 million more in fuel taxes than predicted. With Kokomo pump prices as high as $3.29 a gallon Thursday, it’s probably safe to assume the state is collecting more in sales taxes than it had anticipated at the first of the year.

Still, Bauer’s proposal didn’t become law in 2007. Here’s why: Lawmakers outlined several funding priorities that legislative session. And unlike the federal and state excise taxes motorists pay per gallon, the state’s sales tax doesn’t go to maintain highways and roads.

The sales tax goes into the general fund. It pays for state troopers, social services, schools, veterans benefits and whatever else lawmakers want. This year, “whatever” includes money for Indiana’s new property tax plan.

Capping the sales tax on gas isn’t a bad idea. Even Gov. Mitch Daniels’ spokeswoman Jane Jankowski said he had thought about it.

We believe we have a better idea: Switch to a flat tax on each gallon of gas, as opposed to one based on a percentage of every dollar spent at the pump.

Next legislative session, both houses should negotiate a flat tax that wouldn’t fluctuate with the cost of oil.

        

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