- Proposal would use $1.3 billion or 20% out of the anticipated $4.2 billion of this year’s state surplus.
- Only those over 18 with a valid driver’s license would get the rebate between July and October; elections are November 8.
- Republicans say the short-term fix is only a band-aid and more long-term strategies, like personal income tax cuts, are needed.
North Carolina Senate Democrats have filed a bill for what they call a $200 gas tax rebate. In a news conference Thursday, they presented Senate Bill 897, which would send every North Carolina resident 18 and older as of March 31 either a check or debit card for $200.
Only people with a valid driver’s license would get the rebate, but the money wouldn’t have to be spent on gas. Senate Minority Leader Dan Blue, D-Wake, said they would not support permanently lowering income taxes for everyone. Instead, they call to use $1.3 billion, or 20%, out of the anticipated $4.2 billion of this year’s state surplus to pay for the rebates.
“I want to say in connection with what we have begun to hear Republicans plans are to lower the income tax rate even more than it has been lowered,” said Blue. “That’s setting us up for more problems 2-4 years from now, with the additional revenue loss associated with it. But it is also not as effective as immediate tax rebates and incentives that we have the means to provide to working families and middle-income families right now.”
The proposal from Senate Democrats comes as the entire state legislature is on the ballot in November. There is growing frustration among voters over inflation and Democrat President Joe Biden’s handling of the economy. In a Civitas Poll conducted in late May by the John Locke Foundation, 48.5% of likely voters said they preferred a Republican candidate for the state legislature, with 42.8% saying they preferred a Democrat, and 8.6% were undecided.
Gas prices are one point in the overall soaring cost of living as the economy hits historic inflation and wipes out any gains in wage growth. The Consumer Price Index has spiked 8.3% with food prices up 10% since last year, the largest jump since November 1980, when Ronald Reagan and Republicans were swept into office.
“A one-time rebate that doesn’t cover the average additional monthly cost of Biden’s inflation is nothing more than a Band-Aid,” said Lauren Horsch, spokeswoman for Senate leader Phil Berger, R-Rockingham, in an emailed statement to Carolina Journal. “If we want to help North Carolinians afford their everyday expenses, we should focus on real long-term, permanent tax relief and getting inflation under control.”
Sen. Michael Garrett, D-Guilford, also a co-sponsor of the bill, said Democrats came up with the $200 figure after calculating that is how much a driver in the state would spend on gas taxes between July 1 and the end of the year. Sen. Sydney Batch, D-Wake, is also a co-sponsor.
Blue said if the bill passes, the rebates would go out between July and October in either the form of a check or debit card and the rebate doesn’t necessarily have to be used to pay for gas. It could be used for anything.
Garrett said Democrats didn’t support suspending the gas tax.
“The most fiscally responsible approach was to do a more targeted approach like this where you aren’t providing relief to out-of-state drivers who may be passing through on summer vacation,” he said. “There is also no mechanism in place to make sure that merchants are actually passing those savings along to North Carolinians.”
When asked if he had heard from Senate Republicans on the bill, Blue said no.
“I was expecting to hear back from them that it’s one of the best ideas they ever heard,” he said. “I know they have talked about additional relief in income taxes.”
Paige Terryberry, senior analyst for fiscal policy at the John Locke Foundation says real relief takes a bigger commitment to change.
“It’s nice that Democrats recognize that tax relief is a good way to provide relief to struggling North Carolina families,” she said. “Unfortunately, this politically motivated policy would only provide minor, temporary relief. A gas tax rebate would add to inflationary pressures and fails to address the structural supply-and-demand mismatch for gas.”
Blue said Senate Democrats also want to bring back the back-to-school sales tax holiday and child care tax credit, have a monthly child tax credit for parents, property tax relief for disabled veterans, and the state’s earned income tax credit.
“Real reform, like accelerating the personal income tax cuts, could provide more substantial relief,” Terryberry said.