Badger State Break

Wis. pols propose $170 million gas tax holiday, minimum markup repeal

MADISON, Wis. -- Three Republican lawmakers said that Wisconsinites deserve a gasoline tax holiday for the rest of the year that would cut pump prices by 15 cents a gallon and save them $170.3 million, reported the Associated Press.

The legislators are proposing to cut the gas tax of 29.9 cents a gallon between September 1 to December 31 at all pumps in Wisconsin. It would save about $100 for a family with two cars, they said.

As reported in CSP Daily News yesterday, Illinois is also considering a gasoline tax holiday. And politicians [image-nocss] in New York have suggested the same (see related story in this issue).

"Everybody I talk to, the big issue is how high gas prices are and how high they are going to go," said State Representative Robin Vos (R), one of the proposal's backers in Wisconsin.

Lawmakers there are asking Governor Jim Doyle (D) to convene a special session of the state legislature to pass their proposal before the end of the month. Doyle spokesperson Melanie Fonder said the governor had not yet seen details of the lawmakers' proposal. She said he advocates repealing Wisconsin's minimum markup law on gasoline as one way to cut costs at the pump.

The law requires wholesalers to mark up their prices by at least 3% and retailers by at least 6%. Supporters say it prevents large chains from cutting gas prices and driving out smaller retailers.

A report in the Wisconsin State Journal added that bills that could repeal the law are stalled in committee, and there is strong disagreement over whether the legislation would help ease gasoline prices, which rose to an average of $2.57 in the area Tuesday.

State Senator Dave Zien (R) and State Rep. Jeff Wood (R) earlier this year introduced legislation to repeal the law, the report said. A committee hearing was held on one bill, but no vote was scheduled because the idea didn't have enough support to make it out of committee, Wood said.

The idea may have gotten a boost Monday from Doyle, however, who said he has supported repealing the law since he served as Dane County district attorney. "We're one of no more than a handful of states that maintain a law that came out of (the) Depression era that requires that there be an actual markup on gasoline. (What) people will notice when they come over the border from Minnesota is that there's a 10, 20, 25% drop. The reason is not nearly so much the tax as it is that we have the minimum markup law," he said.

The minimum markup law, which has been in place since the 1930s, requires wholesalers to mark up their prices by at least 3% and retailers by at least 6%. Supporters of minimum markup say it helps prevent large companies from potentially running smaller retailers out of business.

AAA supports repeal because the free market should regulate gasoline prices, not the government, Michael Bie, spokesperson for AAA Wisconsin, told the newspaper. Consumers could save about 1 cent to 2 cents a gallon if the law were repealed, Bie estimated. "This is an outdated law that ensures gasoline in our state can't cost too little," he said.

Wood said he thinks consumers could save more than 4 cents a gallon and perhaps as much as 15 cents a gallon in some areas. Under law, larger retailers are effectively forced to make a higher profit, he said.

The minimum markup law keeps gasoline prices lower by encouraging competition that otherwise could be snuffed out, Bob Bartlett, president of the Wisconsin Petroleum Marketers & Convenience Store Association, told the paper. Without the law, large retailers could sell gasoline and undercut sales of smaller competitors to put them out of business, he said. Law already has a provision that allows retailers to sell at less than the minimum markup if nearby competition warrants it, and the provision is in play in current market conditions, Bartlett added.

Based on Bartlett's estimate that Tuesday's wholesale gas price was about $2.10 per gallon, retailers would have had to sell it at about $2.80 a gallon to comply with a strictly calculated markup, said the report. The average statewide retail price for regular unleaded gasoline was $2.59 Tuesday, according to AAA Wisconsin.

One of the reasons Wisconsin's gasoline prices may be higher than Minnesota's is because Wisconsin's gasoline tax, which amounts to 32.9 cents per gallonabout 11 cents higher than Minnesota's, Bartlett said. The average price for regular unleaded gasoline in Minnesota was $2.48 a gallon, 11 cents less than in Wisconsin, on Tuesday, according to AAA.

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