Proposed gas-tax holiday blasted in NH Senate committee

A proposal to help reduce high gasoline prices with a two-month suspension of the state’s 22-cents-per-gallon tax drew sharp criticism in a N.H. Senate committee Wednesday, including from a top House Republican who said most lawmakers oppose the idea.

“You may or may not know that I had floated this idea in the House, and I might as well have been talking to the wall in regards to garnering support for this,” said Rep. Karen Umberger, R-Kearsarge, who chairs the House Finance Committee.

She also told the Senate Ways and Means Committee that representatives are against a proposal to reduce vehicle registration fees to help motorists facing high gas prices.

Senate Majority Leader Jeb Bradley, R-Wolfeboro, proposed a gas-tax suspension that would last from May 1 through June 30. His proposal came as an amendment to House-passed House Bill 1221, which would reduce the state’s business profits tax from 7.6 percent to 7.5 percent.

Bradley was out of state and unavailable to present his amendment to the Ways and Means Committee on Wednesday, so Sen. Bob Giuda, R-Warren, made the presentation. The committee delayed any action on the legislation until Bradley returns and can testify.

The committee’s ultimate recommendation on the proposal will be considered by the full Senate. If it passes the Senate, it would have to pass the House and be signed by the governor before going into effect.

Bradley’s proposal would cost an estimated $26 million. A surplus in the N.H. General Fund would be used to reimburse the state Highway Fund and the Department of Transportation for this lost money.

The plan was criticized in the committee as providing little for motorists while being difficult to administer.

“I agree that gas prices are too high, but the savings on the gas tax by individual drivers is relatively miniscule ” Umberger said. “You’re not really going to be saving a lot of money.

“And then what happens when the gas tax goes back into effect? We’re going to look terrible.”

She also said the tax suspension would be difficult for retailers to manage both when implemented and when the tax resumed.

Wholesalers pay the state tax and pass this cost on to retailers. The problem would come in when a retailer’s tanks contain a mix of higher-cost taxed gas and lower-cost untaxed gas, making it difficult for retailers to set a price that matches their costs. If the retailer doesn’t charge enough at the pump, the business would lose money, and if it charges too much, consumers wouldn’t get the benefit from the tax reduction, Umberger said.

“The poor retailer doesn’t know whether to charge the tax or not charge the tax,” she said.

The average price for a gallon of regular gas in New Hampshire on Wednesday was $4.09, compared to $4.16 a week ago and $2.71 a year ago, according to AAA.

Sen. David Watters, D-Dover, also testified against the proposal.

He said the average New Hampshire resident drives about 10,000 miles per year and gets 30 miles per gallon. For the two months of the gas-tax holiday, the driver would use 55 gallons of gas. If each gallon was reduced in price by 22 cents through the suspension of the state tax, the driver would see an overall benefit of about $12.

Many motorists are from out of state.

“In some sense what we are doing is making a gas-tax holiday for out-of-state drivers,” Watters said.

He also said that with the wide swings in the cost of gas and the small percentage of the overall price represented by the tax, it’s possible the state could suspend the 22-cent tax and the consumer wouldn’t see a difference in price at the pumps.

Jim Hadley, a former Northwood selectman, testified in favor of the gas-tax suspension.

He said this 22-cent reduction could be significant compared with other steps being taken or considered to lower the price of gas.

U.S. Sen. Maggie Hassan, D-N.H., and Sen. Mark Kelly, D-Ariz., have sponsored a measure to suspend the 18-cent per-gallon federal gas tax until January. Gov. Chris Sununu has called Hassan’s proposal “a gimmick.”

President Joe Biden has announced plans to release 1 million gallons per day for the next six months from the U.S. Strategic Petroleum Reserve. Also, OPEC has announced that it is sticking to a plan to increase its output in May.

Hadley and others who testified Wednesday also objected to language in Bradley’s amendment that placed the blame for gas price increases squarely on the federal government.

“Before January 2021, America was energy independent and exporting energy to our Allies,” the amendment says. “Now due to actions taken by the federal government that include halting pipelines, placing restrictions on leases and permits on federal lands, and curtailing energy production in Alaska, America has become energy dependent on hostile nations, undermining national security.”

In remarks about gas prices on March 31, Biden said oil production slowed earlier in the COVID-19 pandemic and demand has now increased much faster than supplies. He also said the war in Ukraine has contributed to a nearly $1 per-gallon increase in the cost of gas since the start of this year.

Additionally, Biden said, some oil companies are not using thousands of oil-drilling permits and have chosen to keep collecting their highest profits in years, rather than increase production and see prices fall.

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Rick Green can be reached at rgreen@keenesentinel.com or 603-355-8567.

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