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Gregg says he has plan to eliminate state gas tax


– Democratic gubernatorial hopeful John Gregg on Wednesday unveiled the first coordinated policy proposal of the race – the elimination of the state sales tax on gasoline, saving Hoosiers $540 million paid each year.

He said the loss of revenue to the state would be covered by instituting an annual efficiency audit that other states have used to generate funds.

Gregg said the audit will find up to $650 million a year in waste. And he believes that Hoosiers will spend the money they save in all sectors of the society, eventually creating jobs.

“I am convinced it will fire up our economic engine and put more money back into the pockets of all Hoosiers,” he said Wednesday, steps away from a downtown Indianapolis gas station.

Indiana Republican Party spokesman Pete Seat called it a “typical blast-from-the-past policy proposal that spends money we don’t have. Oh, but don’t worry, he promises to figure out how to pay for his idea at some to-be-determined time. Nice try.”

Gregg estimated Hoosier families could save between $261 to $522 a year under the tax elimination, or enough to drive for three to four weeks for free.

By comparison, Gov. Mitch Daniels’ much-touted automatic taxpayer refund is expected to result in a $65 credit for each taxpayer on their 2013 income taxes.

Gregg’s Republican opponent, U.S. Rep. Mike Pence, has yet to have a formal event announcing any specific agenda proposals.

In August, he offered a vague proposal to reduce the state income tax, along with cutting the corporate income tax and estate tax. The General Assembly has since reduced the corporate tax and initiated a phase-out of the inheritance tax. The Republican-led legislature did not find replacement revenue or equivalent cuts for the inheritance tax elimination.

Dropping the income tax to 3 percent as Pence suggested would cost about $540 million. Pence has yet to provide a plan to pay for the cut, except banking on future revenue growth.

“That is the Washington, D.C., way,” Gregg said Wednesday.

Pence spokesman Matt Lloyd said his boss “is not opposed to lifting the sales tax on gasoline but he believes that it is no substitute for broad-based tax reform and the kind of energy policies that will reduce prices at the pump for Hoosiers and lessen our dependence on foreign oil.”

He also joked that time is on his side for finding the money to pay for the sales tax cut, saying the Daniels administration has discovered $500 million in financial errors.

Indiana is one of nine states to charge sales tax on gasoline. That is in addition to the 18-cent gas tax used for highways and roads.

Gregg said it is time to exclude gasoline from the sales tax, just like the state does for food and medicine.

“Gas is not a luxury,” he said.