Rice: Raise gas tax by 13 cents, but trim income tax

U.S. Rep. Tom Rice, R-Myrtle Beach, wants to raise the federal gas tax by 13 cents in exchange for an income tax cut.
U.S. Rep. Tom Rice, R-Myrtle Beach, wants to raise the federal gas tax by 13 cents in exchange for an income tax cut. MyrtleBeachOnline.com file photo

Congressman Tom Rice wants to raise the federal gas tax by 13 cents to pay for highway projects, but only if lawmakers will agree to an income tax cut.

Speaking to a room full of business and government leaders Friday morning, the Republican representative from Myrtle Beach said his office is crafting a bill aimed at shoring up the Federal Highway Trust Fund, the source of about 80 percent of highway spending. More money flows out of that account than the gas tax brings in, and in recent years lawmakers have searched for a way to consistently pay for the country’s road and bridge needs.

Rice criticized the stopgap measures officials have used to temporarily provide money for infrastructure, saying Congress’s uncertainty hampers the planning of state leaders.

“Transportation is so fundamental to our competitiveness,” he said. “You can’t stall a road project like that. You can’t pull it off the table like that. It takes years of conception, planning and development.”

The federal gasoline tax has remained at 18.4 cents per gallon since 1993. Over the last seven years, lawmakers have shifted more than $50 billion in general funds to the highway trust account. Congress hasn’t signed off on a multi-year transportation bill in a decade.

South Carolina tacks on an additional 16.75 cents per gallon in state tax, which funds the S.C. Department of Transportation. The Palmetto State’s gas tax hasn’t risen since 1987 and ranks among the lowest in the nation. But South Carolina residents also spend a larger portion of their incomes on fuel than nearly all of their peers in other states.

Despite his support for the hike, Rice insisted his seven-year proposal would be “revenue neutral” because the increase would be offset by a decrease in income taxes. He didn’t provide many specifics, including which programs might see cuts to generate more money for roads.

Rice did point out that he’s supported a gas tax/income tax swap long before he entered politics (he was elected to Congress in 2012). In 2008, Rice wrote a column in The Sun News advocating for a $1 gas tax in exchange for a $1,000 income tax credit.

“Nobody likes to pay taxes,” he wrote. “Intelligent design of the tax system is perhaps the most useful means available to the government of instituting policy. The time has come for a meaningful gas tax.”

On Friday, Rice noted that Gov. Nikki Haley also supports a gas tax/income tax exchange at the state level. South Carolina lawmakers debated raising the state gas tax this year, but could not agree on the terms.

“Same thing,” Rice said. “She wanted to cut more income tax than gas tax. I want mine to be revenue neutral.”

Rice’s plan found support among the more than 65 officials and businessmen gathered Friday at the Barefoot Resort Conference Center for a breakfast organized by the North Myrtle Beach Chamber of Commerce.

“I like the proposal so much that I’ve offered the same proposal at the state level,” said state Sen. Greg Hembree, R-North Myrtle Beach.

Hembree’s plan, which he expects to push when lawmakers convene in January, is a modified version of one discussed in the Senate Republican Caucus this year,

Under Hembree’s plan, the state’s per-gallon gas tax would gradually increase over five years: two cents per year for the first three years and three cents per year for the final two. The end result would be an increase of 12 cents per gallon.

As fuel costs rise, the income tax for all levels would gradually drop by .2 percent, stopping at 1 percent.

A key selling point, Hembree said, is the “circuit breaker” built into the proposal. Should state revenues not grow by 2 percent per year, the tax increase and simultaneous tax cut would be suspended for a year.

“If you have a recession, everything stays where it is,” Hembree said. “You’re basically taking the tax cut out of growth, not out of core functions of government.”

Other officials at Friday’s breakfast also voiced support for boosting the gas taxes to pay for roads.

“We’ve got a deteriorating infrastructure system throughout our country,” said Horry County Council Chairman Mark Lazarus. “Unfortunately, to fix things it takes money.”

Lazarus said those using the roads should expect to pay for their upkeep.

“That’s a user fee more than it is a tax in my opinion,” he said. “People that are going to pay it are using the system. So what better way is there than that?”

County leaders are considering their own fee hike for repairing local roads. Vehicle owners pay a $30 annual fee to the county. Horry County Council is looking to increase that charge to $50.

“Probably one of the biggest mistakes that we made in Horry County a long time ago is every time a subdivision is finished, we started taking those roads in as Horry County roads,” Lazarus said. “It’s so overwhelming, now the roads need to be fixed.”

Tony Brawner doesn’t have a problem with that. A co-owner of the prop-making company Little Spider Creations recently moved with his family’s business from Colorado to North Myrtle Beach.

Brawner said Rice’s explanation of the gas tax hike made it seem justified.

“When you hear tax, it automatically sends a red flag,” he said. “But then understanding where he’s coming from, knowing the reason why … because of hearing the other side, I was fine with it.”

Contact CHARLES D. PERRY at 626-0218 or on Twitter @TSN_CharlesPerr.

By the numbers

13 cents per gallon | Federal gas tax increase proposed by U.S. Rep. Tom Rice, R-Myrtle Beach

12 cents per gallon | State gas tax increase proposed by state Sen. Greg Hembree, R-North Myrtle Beach

$20 | Increase in road fee being considered by Horry County Council

18.4 cents per gallon | Federal gas tax

1993 | Last time federal gas tax increased

16.75 cents per gallon | State gas tax

1987 | Last time state gas tax increased