North Carolina Suspends Its Gas Tax

Raleigh, N.C. — North Carolina on Saturday, 10 October, stopped charging its state tax on gasoline and diesel, after Gov. Josh Stein signed a bill on Friday suspending the 41-cents-a-gallon tax until 30 November.

The legislature's fiscal staff estimate the 52-day suspension will cost about $362 million in tax that normally goes mostly to road projects. The law makes that up from a state reserve fund, the Stabilization and Inflation Reserve, so the road funds and other accounts that get the tax lose nothing.

Why now

Fuel prices have stayed high since President Trump launched an attack on Iran earlier this year, WRAL reported. On 3 October, Republican leaders of the General Assembly, which had been on a break, announced a special session to deal with them. "They need real relief, and they need it now," Senate leader Phil Berger wrote on social media.

The bill, House Bill 3, was introduced by the Republican leadership and passed on 7 October with overwhelming support from both parties, 111 to 1 in the House and 41 to 0 in the Senate in recorded votes. Stein, a Democrat, signed it on 9 October.

"Grocery bills are going up. Power bills are going up, healthcare bills are going up, and thanks to the Trump administration's disastrous war of choice against Iran, gas prices are sky high," Stein said. "So when we have a chance to bring down costs for families, we need to take it."

House Speaker Destin Hall, a Republican, said the suspension was possible because of "years of responsible budgeting."

When drivers will see it

Not right away. Gas stations still hold fuel they bought with the tax already paid, so it could be days or weeks before they buy new, cheaper fuel, WRAL reported. The law says the price drivers pay should reflect the suspension, but it does not make stations cut prices on fuel they bought with the tax already paid.

Part of a wider push

North Carolina is not acting alone. A week earlier, Stein told the state Department of Revenue to stop penalising highway use of red-dyed diesel, a fuel normally reserved for off-road farm and construction equipment, through 31 December, and the new law puts that pause for farm use in writing. On Monday, 5 October, President Trump signed an executive order easing federal limits on the same fuel, WRAL reported. On Friday the federal government also lifted sanctions on Russian diesel to bring prices down, as this paper reported on Saturday.

The politics

The tax break comes four weeks before the November elections, when all 170 seats in the North Carolina General Assembly are on the ballot. Absentee ballots went out last month and early in-person voting starts on 15 October.

Democrats say Republicans are cutting the tax to help their own re-election. Stein signed the bill at the farm of Jamie Ager, a Democrat running for Congress in western North Carolina. "Taking action four weeks before an election is not enough," Stein said. "This law cannot be the end of our work to lower folks' cost of living." He urged lawmakers to take up housing, food and health care costs.

Ager's Republican opponent, state Rep. Jennifer Balkcom, who voted for the bill, called the signing at Ager's farm "laughable and insulting to the citizens of western North Carolina."

Michael Bitzer, a political scientist at Catawba College, told WRAL the break could help some incumbents in close races but would not be "a silver bullet" for Republicans.

What it means in practice

By this paper's arithmetic, 41 cents a gallon on a 15-gallon tank comes to about $6.15 less in state tax, if stations pass the full saving on. A trucker or farmer buying diesel gets the same 41 cents a gallon. The tax comes back on 1 December unless lawmakers extend it.

What happens next

Prices at the pump should start to reflect the cut as stations restock. The legislature would have to act again to keep the suspension beyond 30 November.