NEWS ARTICLE

Candidates for governor wielded divergent views on Maryland's looming gas tax hike like a cudgel this week, seeking to score points with voters ahead of a July primary while those in a position to bring relief stood by.

The 18 percent increase, scheduled to automatically occur in July, divided the crowded Democratic field as Republican candidates capitalized on economic discontent. That's a strategy that political experts noted smoothed a path to victory in two elections for Republican Gov. Larry Hogan in a deeply Democratic state.

"This is already shaping up to be a bad year for Democrats. This is an issue tailor-made for Republicans running in Maryland," said Todd Eberly, a political scientist at St. Mary's College.

Hogan's lack of action has candidates jostling to frame what leaders should or could have done differently. The term-limited governor has suggested that a Democratic state official, who has been his ally in the past but is now one of the candidates to succeed him, should use his power to help motorists even though state lawyers say that's not legally permitted.

Ahead of the July 19 primary, some gubernatorial candidates called for the increase to be halted for six months or a year. Others pitched another gas tax holiday that would suspend the state's gas tax altogether, which is set to increase from 36.1 cents per gallon to 42.7 cents.

For all the candidates' positioning, however, Maryland's political leaders intend to let the increases take effect, saying the state's transportation infrastructure cannot afford to lose the $200 million that the increase will generate in the next year.

The tax increase, which is automatically adjusted based on the consumer price index every July, often goes unnoticed. But with inflation at a 40-year high, this year's increase translates into a 6.6-cent jump at a time when prices have already been shattering records for months.

For an average sedan's 12-gallon tank, the increase amounts to an extra 79 cents per fill-up.

"There's a huge difference between the actual dollar cost and the political cost," Eberly said. "And the political cost of seeming indifferent is pretty substantial."

Hogan on Monday announced the new rate and challenged his former political ally Comptroller Peter Franchot, a leading Democratic contender to succeed him, to find a way to stave it off. Franchot, the state's tax collector, lacks the authority to do that, Maryland's attorney general said this week.

"This tax increase, while hardship-inducing for Marylanders at any time, is simply unconscionable," Hogan wrote, telling Franchot: "It is my hope that you will use every legal and regulatory power at your disposal to halt or minimize the impact of the accelerating gas taxes."

He asked the comptroller to stop collecting the tax and waive penalties for people who refuse to pay. The comptroller's office said he doesn't have authority to do it and it would do little to drive down prices because those taxes would eventually come due.

"Simply put, if I was legally able to prevent the motor fuel tax increase from going into effect, I would have done so already," Franchot wrote in a letter Tuesday that asked state legislative leaders to vote to forestall the increase instead.

He asked Hogan and presiding officers to convene a special session to vote on it next week, on June 1. The House Republican Caucus, which unsuccessfully pushed a bill this spring to stave off the increase, sent a letter making the same request.

Hogan has not responded, and the legislature's presiding officers declined.

"We cannot have a reliable transportation network that regularly experiences failing conditions due to insufficient funding and deferred maintenance," House Speaker Adrienne A. Jones (D-Baltimore County) and Senate President Bill Ferguson (D-Baltimore City) said in a joint statement.

"The problem is not the marginal impact of $0.06 inflation adjustment to the wholesale gas tax. The problem is big oil companies exploiting global uncertainty to drive the price of gas to more than $4 a gallon."

The episode, however, created another opportunity for Hogan's handpicked candidate to succeed him, former commerce secretary Kelly Schulz, to draw attention to her ads and a social media blitz about Democratic inaction on gas prices.

She has taken a page from the governor's playbook, whose upset 2014 victory in deep-blue Maryland was built on cleverly phrased attacks on taxes such as "the rain tax."

Schulz labeled this increase "The Inflation Tax."

"I won't be afraid to fight for hard-working Marylanders," she wrote on Facebook this week, saying: "Comptroller Franchot is shirking his responsibility." She added in a video that she would repeal it if elected, "just like the governor repealed the rain tax the first year that he was in office."

Schulz's chief Republican opponent, Del. Dan Cox, said on Facebook on Wednesday that if elected he would use executive power to immediately suspend the gas tax, though it was not immediately clear if the governor has authority to do that.

Economists say repealing the tax would have larger consequences, even if voters who can expect to feel higher prices for the rest of year see it differently.

Anirban Basu, an economist and CEO of the Sage Policy Group, said gas prices have an outsize psychological impact on how people view inflation but that there's actually very little state officials can do to meaningfully change them.

A winning political strategy might be to forgo the increase and suspend the gas tax altogether, he said, but "if I was trying to give advice based on what I think is good public policy, I would say let the gas tax increase transpire. We need the revenue for infrastructure, and it's good if people start driving less."

The competitive and crowded Democratic field for governor is divided on whether to adjust gas taxes.

John B. King Jr., a former education secretary under President Barack Obama, for example, said focusing on a reprieve is shortsighted when leaders should be swiftly reducing dependence on fossil fuels. Lifting the tax would not save individual drivers much money but would strip cash from public works projects, he said.

But three other Democrats backed at least staving off the increase, arguing that voters need immediate relief. Wes Moore, an author and former nonprofit chief; Jon Baron, a former federal appointee and nonprofit chief; and Tom Perez, a former labor secretary under Obama, each backed a delay in the tax hike. Perez added that he supported targeted relief to the hike that would help mass transit users, too.

Other Democratic candidates, including Ashwani Jain and two others, went further, pushing for the tax to be suspended altogether.

Rushern Baker, the former Prince George's County executive, and Doug Gansler, the former state attorney general, each used the jousting between Hogan and Franchot to suggest they would act where others would not.

"The people with the ability to provide relief are just finger-pointing while people are paying an arm and leg just to get to work in the morning," Baker said. "Voters need to know that they are voting for someone with the will act when things get tough."

Gansler backed the idea of using executive power to suspend the gas tax: "Marylanders need relief at the pump, and they are tired of this bickering and dithering."

Some motorists say they would welcome the relief.

"It's terrible," William Obioha, 19, said as he leaned on his Subaru Legacy at a Sunoco gas station in Silver Spring this week, where gas was going for $4.90 a gallon. Obioha said he stopped working as a driver for Door Dash a month ago because high gas prices were cutting into his profits and making it untenable.

Obioha said he doesn't pay attention much to politics, but "all I want is the gas to go down."

Reference

Cox, E. (2022). Surging gas taxes is expected to be a political weapon in Maryland politics.

QUESTIONS

Using the news article above that discusses the economic concept (taxes and consumer or producer surplus) and explains using microeconomics understandings or terminologies The Term paper should have the following structure: 1. Abstract (0.5 of a page) - the short description of the concepts, problems, questions discussed in the Term paper. 2. Introduction (0.5 of a page) (optional) 3. Literature Review (about 2 pages) - please compare and contrast the opinions of the authors of the articles, and present the important information, data, and statistics to support your conclusions. The Literature review must be written in your own words with small quotes from the article. All quotes must have references by the 7th Edition APA Style. 4. Discussion (about 2 pages) - Your task for this part of the Term paper is to analyze the issue described in the articles using the economic concepts and theory learned in this class. Refer to the course content materials and use specific economic vocabulary within your term paper. The articles you choose may not use these exact terms; therefore, it is incumbent upon you to convert the article language into economic language as is appropriate. Include at least one graph in it

5. Conclusion