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Chief economist explains Indiana’s rising gas taxes; now at record-high

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Published: May. 17, 2022 at 6:19 PM CDT
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EVANSVILLE, Ind. (WFIE) - According to the Indiana Department of Revenue, Indiana’s average gas price before taxes between March 16 and April 15 was around $3.43 pre-tax.

That’s the number they use when calculating the Indiana Gas Use Tax.

This month, the tax is 24.1 cents.

That’s the second month in a row that Hoosier’s will be paying over 20 cents per gallon in use tax.

Old National Chief Economist Matt Finn says that specific tax will continue to mirror our gas prices.

“Indiana, for better or worse, is one those states where, again, the more expensive gas gets, the more expensive gas gets,” says Finn, “because the tax rate increases along with the price of gas.”

That 24.1 cents came from an average of $3.43 a gallon pre-tax.

Finn says it’s likely that these increased prices could lead to even more taxes.

“The last 30 days has been $3.90 a gallon which means the gas tax is probably going to go up again and set another record,” says Finn.

Not only does the 24.1 cents stack onto gas prices, you also have to add in the state gasoline tax, which is 32 cents a gallon, and the federal excise tax on gas, which is 18.4 cents a gallon.

It adds up quick, all the way up to 74.5 cents extra per gallon, an Indiana state record.

For folks like Timothy Howe, filling up at the pump has become a pain.

“We’ve got 4 vehicles, and then we got, what, 3 lawnmowers running all over the place. We’ve got a daughter going back and forth to college from Vincennes back to Lynnville, and it’s getting ridiculous,” says Howe.

There’s currently no limit to the amount of gasoline use tax that can be imposed.

So just as Finn says, “as long as gas goes up, gas goes up.”

Finn says the most economically sound way to combat this is to not necessarily pause the tax, as has been proposed by Indiana Democrats, but rather to put a cap on how high the use tax can rise.

He says that the funds from the use tax are still important for funding infrastructure and roads.

That’s a statement echoed in the release that we received from the Indiana Department of Revenue, which reads in part:

“The tax is distributed to the motor vehicle highway account, the local road and bridge matching account, special transportation flexibility fund, state highway fund and state general fund.”

With high gas prices, METS is offering free bus rides for all passengers. Anyone can ride for free Wednesday night from 4 p.m. until midnight.

They say the free trips are to help promote using public transportation.

They’ll also run this special next Wednesday.

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