Lt. Gov. proposes suspension of gas tax, which would drop gas by 18.4 cents per gallon
Published 11:45 am Tuesday, March 15, 2022
(AP) — Mississippi Lt. Gov. Delbert Hosemann said Monday that he and other Senate leaders will push to suspend the state’s gasoline tax for six months to give drivers a break as gas prices continue climbing.
Several states are making similar moves, and Hosemann’s announcement adds a new twist to increasingly contentious legislative discussions about possible tax breaks in Mississippi.
Republicans control the state House and Senate by wide margins, but leaders of the two chambers disagree about proposals that would reduce or eliminate the income tax and whether those plans should include a sales tax increase on most items, including clothing.
The state tax is 18.4 cents per gallon, and money goes to the Mississippi Department of Transportation. Republican Hosemann proposes that the state use money from a capital expense fund to give $215 million to the department to make up for the temporary loss of gas tax revenue.
“We can do that because we’re having a very good year in Mississippi,” Hosemann said during a news conference.
Mississippi has enjoyed robust tax collections in recent months, partly because of federal spending during the COVID-19 pandemic.
Other tax cut proposals
House Speaker Philip Gunn and Gov. Tate Reeves, who are also Republicans, want the Legislature to phase out the state income tax. Reeves said Friday that he might call a special legislative session to seek the income tax change if the House and Senate reach an impasse on the issue.
Legislators face deadlines late this month to agree on tax and budget bills for the year that begins July 1. The three-month regular session is scheduled to end April 3.
Mississippi’s income tax generates 34% of state revenue. Critics say the state can’t afford to cut taxes because it chronically underfunds education and has significant financial obligations to improve its mental health and foster care systems.
Gunn is pushing to phase out the entire state income tax. Hosemann has advocated eliminating some, but not all, of the income tax.
Legislatures in several states are considering tax cuts this year.
The Mississippi House and Senate have passed separate tax cut proposals. Senate Bill 3164 would eliminate part of the income tax, while House Bill 531 would phase out the income tax over several years. At least one of those bills must survive a Wednesday deadline to keep the issue alive during the regular session.
Both bills would reduce the 7% sales tax on groceries. Both would reduce the cost of car tags, with a larger reduction proposed by the House. The Senate bill includes one-time income tax rebates of $100 to $1,000, with larger rebates going to people with larger incomes.
Mississippi has a 7% sales tax on most other items. The Senate plan would not change that, but the House plan would increase it to 8.5%.
Increasing the sales tax would have a disproportionally larger effect on people with modest incomes. The poorest residents would see no gain from eliminating the income tax because they are not paying it now.