Offering frequent news and analysis from the majestic Evergreen State and beyond, The Cascadia Advocate is the Northwest Progressive Institute's unconventional perspective on world, national, and local politics.

Sunday, May 14, 2006

Tribal stations to escape gas tax?

A more effective toll booth than the gas pump has yet to be devised. This is a fact which escaped US District Court Judge Thomas Zilly in November when he ruled that stations on Squaxin and Swinomish tribal lands need not pay the 31 cent state gas tax. See TNT

It would be one thing if distributors and consumers walked into the stations, but everyone drives, and everyone drives on the road. They need the roads to the same extent they need the gasoline. Don't need one without the other. The gas tax goes 100% to roads. A rebate to tribes has been worked out through DOL to account for native consumers and tribal roads.

The sales tax ought to be collected on gasoline, but it's not. Gas is favored just like food and drugs, all specifically exempted.

So what was the rationale? "The burden of the tax falls on retailers, not consumers." If somebody drives away without paying, tribal reasoning went, the retailer has to pay the tax. Sounds good to me, said the judge. Humbug. If they don't drive away, the retailers don't pay the tax. Better to order restitution for thievery than throw out the gas tax.

This is nonsense, but it has lawmakers, e.g., Sen. Ken Jacobsen (D-Seattle), concerned. Maybe they should be. Apparently the legal gene trumps the economic common sense gene. It was, after all, a majority of the State Supreme Court in 1932 which dismissed a voter approved income tax on the preposterous grounds that income is a form of property. The income tax that had been voted in carried a graduated rate. Under the State's constitution, property can be taxed only at a single rate. So if income is property, it cannot be taxed at more than one rate. And if a river were dry land, we'd have fewer fish.

Judge Zilly should be apprised that the fact that consumers pay the gas tax is proven by the inelasticity of gas prices. When the price goes up, consumption doesn't go down very much. He might also be interested to know that Washingtonians pay the taxes of Alaska. Alaska lives on oil revenue. Oil accounts for upward of 90 percent of general state revenue in Alaska, and we don't mean gas tax.

Interestingly, taxes are levied on oil company profits in Alaska, and an argument is currently going on as to whether to raise them to 22.5 percent, as opposed to 20 percent.

It is very unlikely we are going to see a rush to tribal gas-shops like the ones to the smoke shops. The tribes affected by Zilly's ruling immediately established a 31 cent tax of their own. More dangerous is that something with serious economic consequences might get into the courts.

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