Gas Tax Wars

I don’t pretend that I know a lot about the oil industry. In fact, until yesterday I had never heard of the concept of “blender pumps”.
Apparently, there are two types of ethanol that is sold to South Dakota gas retailers. E85 contains 75 – 85% ethanol, and the state tax on that product is ten cents per gallon. E10 contains around 10% ethanol, and the state tax is twenty cents per gallon. These taxes are collected on the product when delivered to the retailer.
There are 17 retailers in this state that allows consumers to create their own blend. By pushing a button on the pump, you can create a “homemade” version of E20 or E30. The pumps figure out the mix, and the tax that is forwarded to the consumer depends on how much of each form of gas is pumped into your vehicle. Besides giving consumers more choices at the pumps, the ethanol industry also claims that these pumps create the most efficient blends.
This sounds pretty cut and dry, if you ask me. Not to our Governor, though. If retailers offered E20 or E30 as a normal product, the tax collected on delivery would be higher than is what they receive from the combination of individual elements.
During our last legislative session, Governor Rounds attempted to close what he perceived to be a loophole in the law. At a time of rising gas prices, though, along with the premise that this would send a “poor message” to one of our state’s fastest growing industries, our legislature failed to pass his legislation.
This story should end right at this point, as only the legislature can create or adjust taxes. Yet two weeks ago, he instructed the Department of Revenue to send a memo to all gas outlets that they would need to begin collecting an additional twenty cents per gallon tax from consumers that use these blender pumps.
Again, traditional gas taxes are collected when fuel is delivered, and then are passed on to us when we fill out tanks. If we use these special pumps, we not only will pay that original tax but another twenty cents per gallon. I don’t know how Rounds can say with a straight face that this is not double taxation.
Should I be surprised by this move? Not really. There’s a side of Rounds that seems to be extremely arrogant, and this is a perfect example. He didn’t get his way this past winter, so he’s just going around the legislative branch and attempting to enforce his will anyway. It just seems to be petty, especially on a product that’s available at less than twenty businesses. Does he have relatives who own competitors to some of these stores? It wouldn’t surprise me.


Anonymous said…
Apparently Rant-a-Bit doesn't require rational assumptions. While you whin over a gas tax, the price for crude will climb due to international economic development. All these countries we establish trade agreements with increase their consumption. Hold on to your butt for $5 per gallon. You sound like the House Speaker. Worry over bad domestic public policy, and ignor the international market. Democrats never understand the international market place.
And if you're just discovering that Rounds sucks, you need to stop drinking. People that allowed Rounds to become governor deserve the kick in the butt. Serves them right.
Hey your buddy Randell Beck (Argus Exec Editor) was in court again answering for his slander of Dan Scott. Serves him right. Beck is a jerk - hope he loses his job and the media whore gets sued for millions.

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