RALEIGH, N.C. -- On January 1, North Carolina's gasoline and diesel fuel tax returned to its legal limit under state law, 30.15 cents per gallon, reported The Raleigh News & Observer. That was an increase of 0.2 cents per gallona penny for every 5 gallonsmore than we paid during the last half of 2007.
The N.C. Department of Revenue would have set the new tax rate 3.53 cents higher, at 33.68 cents, if Governor Mike Easley and the legislature had not agreed last year to cap it at 30.15 cents.
A portion of the tax is indexed [image-nocss] to rise and fall with wholesale fuel prices.
North Carolina's gasoline tax, the state's primary funding source for road improvements and other transportation needs, is one of the highest in the nation, said the report. As of July 2007, only 14 states had higher gasoline tax rates, according to the newspaper, citing the American Petroleum Institute (API).
But, compared to some of its neighbors, North Carolina sets a low rate on its No. 2 source of transportation money: the highway use tax collected on car sales. State traffic counts and road building costs are increasing steadily, but improved fuel economy has reduced gas sales in recent years, the report said, keeping tax collections flat. State leaders are looking for new ways to catch up with road and transit needs, said the News & Observer.
North Carolina's gasoline and diesel fuel tax is indexed to rise and fall with changes in wholesale fuel prices, according to a formula set by law: 17.5 cents plus either 3.5 cents or 7% of the average wholesale fuel price (whichever is greater), plus a 0.25-cent fuel inspection fee.
The N.C. Department of Revenue calculated the new rate based on an average wholesale price of $2.275 per gallon over a six-month period in 2006. That would set the variable portion of the tax at 15.93 cents, but state leaders agreed last year to cap it at 12.4 cents.
Drivers also pay federal taxes: 18.4 cents on gasoline, for a federal-state tax of 48.55 cents per gallon; 24.4 cents on diesel, for a total tax of 54.55 cents.
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