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June 07, 2007

North Carolina gas tax

With gas prices going up, people are looking for ways to save on filling up their tanks. Some drivers point to the fact that North Carolina's gas tax per gallon, saying that because it's sixth highest in the nation and tops in the Southeast, it should be lowered. But N.C. State University economist Mike Walden says that may cause other taxes to rise.

"North Carolina's gas tax is high; there's no question about that," explains Dr. Walden, "but it is because other taxes in our state are low.

"Now let me explain: North Carolina, unlike most states, finances about 90 percent of its highway spending from the state level. Local governments are hardly involved at all. Therefore North Carolina relies on state level taxes to finance highways -- and primarily again this is the gas tax," he adds.

"In other states where local governments share in paying for the roads, they rely not on a local gas tax -- in fact, that's very unusual -- they rely on the property tax.

"So in a nutshell, the reason North Carolina's gas tax is high is because our local property taxes are lower than they would have been if local governments had gotten into the act of roads," he concludes. "And, indeed, our local property taxes are very low, both nationally and compared to other southeastern states."

Posted by deeshore at June 7, 2007 11:46 AM