Q&A about DC’s gas tax

Nature's fuel

Who wouldn’t be happy about Mother Nature’s Fuel?

How is DC’s current gas tax computed?

It’s 8% on the wholesale price per gallon… with a floor of $2.94, so that the revenue doesn’t drop below the prior rate of $0.235 per gallon. Since 2015, the gas tax rate has been at that floor.

It’s levied at the same rate on a variety of fuels, including ” including gasoline, diesel fuel, benzol, benzene, naphtha, kerosene, heating oils, [and] all liquified petroleum gases.”

Why did DC change how its gas tax is computed?

Here’s some background from DCFPI about why that changed. Maryland and Virginia also shifted to a percentage basis around the same time.

When did the gas tax computation change?

It was Phil Mendelsohn’s idea, and it was implemented rather quickly:
– May 21, 2013 headline in the Post: “D.C. council chairman seeks shift in collecting fuel taxes.”
– May 22, 2013 headline: “D.C. Council agrees to scrap per-gallon gas tax in favor of levy on wholesale fuel.”

How else could the gas tax be computed?

Here’s one goofy idea: Burning a gallon of gas produces 19.64 pounds of carbon dioxide. One could thus levy “a motor fuels tax of $0.0133 per pound of carbon dioxide emissions that result from the fuel’s combustion,” which would result in a tax of:
– $0.235/gallon for gasoline with 10% ethanol (the usual mix around here)
– $0.261/gallon for pure gasoline (usually only sold as marine fuel around here)
– $0.298/gallon for pure diesel
– $0.276/gallon for pure biodiesel
Doing so would technically put a “carbon tax” on the books without appreciably raising existing tax rates, and providing a very small incentive for biofuels.

Of course, a recalculation is also an opportunity to harmonize rates with a neighboring jurisdiction… see below.

(Interesting fact: British Columbia applies its carbon tax to fuels on a per-liter basis.)

How does DC’s gas tax rate compare to its neighbors’?

Maryland’s current rate is equivalent to $0.335 per gallon. (Yes, that’s $0.10 higher than DC’s.) Virginia’s current rate is $0.162.

How might DC gas station owners react to an increased gas tax?

You’ll have to ask them, but I was struck by this passage in a 2011 CityPaper profile (by Christine McDonald) of Joe Mamo, who owns nearly half of DC’s gas stations:

“We are really a real estate company,” he says. “We’re in it for the real estate.” Mamo considers the coming transition inevitable, given the high cost of D.C. real estate and predictions about “peak oil,” alternative fuels, and electric cars that might eventually make gas stations obsolete. “Long term, the real estate is where the value is,” he says.

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