Franchot takes aim at sales tax on gas

As if Gov. Martin O'Malley didn't have enough opposition to his proposal to apply Maryland's 6 percent sales tax to purchases of gasoline, he now he faces an insurgency within his own party.

Comptroller Peter Franchot, building on his previous objections to a gas tax increase, will hold what he's calling an "informational roundtable" on the issue Tuesday in Annapolis.

Ostensibly, the noon event at the Louis L. Goldstein Treasury Building will be an opportunity to "clearly lay out how the Maryland tax on gasoline is regulated and administered" and to answer technical questions.

But apart from the comptroller and his staff, the invited guests are two outspoken industry opponents of gas tax increases in general and the governor's sales tax proposal in particular.

O'Malley has said his gas tax proposal is needed to pay for a backlog of transportation projects; it would eventually add roughly 18 cents a gallon at current prices but more if prices goes up. An O'Malley spokeswoman said the governor's office will not be represented at the roundtable.

"We haven't been invited," said press secretary Raquel Guillory.

While both are Democrats, Franchot and O'Malley have never been political allies. And in recent months, Franchot, who is widely viewed as a possible gubernatorial candidate, has regularly taken advantage of his seat on the three-member Board of Public Works to put distance between himself and O'Malley on spending issues and the awarding of state contracts.

Now, with the gas sales tax, Franchot has found a high-profile issue with a direct connection to the office he holds. In Maryland, the comptroller is charged with administering and collecting taxes.

His spokesman, Joseph Shapiro, said the roundtable was scheduled because the comptroller's office has been receiving many inquiries about how the gas tax is administered since O'Malley outlined his proposal.

Wills Group Chief Executive Lock Wills Jr., one of the comptroller's industry guests, said that applying the sales tax to gasoline would be "an administrative nightmare" compared with the traditional, cents-per-gallon excise tax on motor fuel.

"It's pretty simple today," said Wills, whose company is the parent of Southern Maryland Oil in La Plata. There is one tax on gas, 23.5 cents a gallon, and another on diesel, 24.5 cents a gallon.

With the sales tax, which O'Malley wants to phase in over three years, there could be 160 separate tax rates to calculate, Wills said. "It's going to be expensive to create and maintain the software," he said.

Wills and Franchot's other invited speaker, Pete Horrigan, president of the Mid-Atlantic Petroleum Distributors' Association, oppose any type of gas tax increase on the scale O'Malley is proposing, which they say would chase business across state lines.

Horrigan said that with the governor's proposal, Maryland gas prices would average 26 cents a gallon more than in Virginia and 20 cents more than Delaware or the District of Columbia.

"Customers will shop for a penny," Horrigan said. "They'll drive 10 miles for 5 cents [a gallon]. Can you imagine what they'll do for 20 cents?"

Even more important, he said, diesel would cost nearly 27 cents a gallon less in New Jersey — an important consideration for truckers.

"Trucks will drive right through Maryland," he said. "They're not going to stop and buy anything here if they don't have to."

Franchot was traveling in Western Maryland and could not be reached for comment. Shapiro said Wills and Horrigan would describe the operations of the gas tax from the industry's point of view.

"They represent the people we work with in enforcing the laws," Shapiro said.

As of Monday, the governor's office still had not released a text of a transportation revenue bill. Among the questions surrounding the proposal is how tax increases would be capped if prices spike — a mechanism the governor said he would include. The administration said it will propose implementing the increase in three increments of 2 percentage points each.

Guillory, the spokeswoman, said the governor's staff is still working on crafting the bill.

"If the comptroller wants to hold a forum without all the details, that's perfectly within his rights," she said.

Franchot, elected as a liberal insurgent over the late Comptroller William Donald Schaefer in 2006, has positioned himself on the conservative end of the prospective field of Democratic candidates for governor in 2014, when O'Malley will be barred from running again.

Todd Eberly, a professor of political science at St. Mary's College of Maryland, said Franchot's moves to oppose an unpopular tax make "perfect sense" for a comptroller with higher aspirations.

"He's also a member of the executive branch, and he would not want to be linked with O'Malley," Eberly said.

Eberly said there's little risk in Franchot taking a conservative position on the gas tax because Lt. Gov. Anthony G. Brown and Attorney General Douglas Gansler also likely candidates — will presumably contend for more liberal voters. Howard County Executive Ken Ulman is a fourth Democrat currently expected to run.

Unlike some issues he could choose, Franchot's involvement in the gas tax issue would be viewed as a natural extension of his elected office, Eberly said.

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