Pennsylvania Gas Tax Hike to Be Felt at the Pump

Suppliers are tasked with collecting the new wholesale gasoline tax, which retailers have said will be passed on to drivers.

January 02, 2014

HARRISBURG, Penn. — On Jan. 1, Pennsylvania raised fuel taxes under its new transportation law, and supply companies say that increase will reach the pump, the Associated Press reports.

Petroleum trucking firms and gasoline station owners will collect the Oil Company Franchise Tax. Sheetz has already indicated the wholesale tax would be incorporated into pump prices. “Our margins are extremely minimal with gasoline and any increase in cost, like any other product, ultimately gets passed on in the retail price,” said Monica Jones, Sheetz spokeswoman.

John J. Reilly, president of Reilly & Sons, a fuel distribution company, has no choice but to charge his six gasoline stations a higher price because of the tax. “Unfortunately, if it’s going to go up 10 cents, it’s going to go up 10 cents to people we supply,” he said. “Nobody can eat a penny today, much less 10 cents.”

Gasoline stations usually make a 3-cent-per-gallon pretax profit, said NACS spokesman Jeff Lenard, making it impractical for retailers to absorb the tax increase without passing it along. Petroleum distribution companies say their profit margins are thinner than that.

Yesterday, the tax on regular, unleaded gasoline jumped 9.5 cents per gallon, with diesel bumping up 13 cents per gallon. The new transportation law adds higher taxes and fees over a five-year period to fund approximately 40% of the state’s transportation spending for 2013. The law revokes a 12-cents-per-gallon tax retailers had to pay Pennsylvania, but the rates of the Oil Company Franchise Tax rose to cover that loss.

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