Mississippi Lt. Governor Delbert Hosemann is calling for a six-month suspension of the state’s 18.4-cent gas tax to combat record-level inflation.
“The No. 1 concern citizens are discussing around their kitchen tables is the increased cost of goods and services,” Hosemann said. “Reducing what Mississippians are paying at the pump is direct and immediate relief to families.”
Several states are making similar moves, and Hosemann’s announcement adds a new twist to increasingly contentious legislative discussions about possible tax breaks in Mississippi.
Suspending the gas tax for six months would cost about $215 million. Entities which receive a diversion currently from the gas tax would be made whole through the Capital Expense Fund (additional revenue) under Hosemann’s proposal.
Earlier this Session, the Senate passed legislation which would provide a boost of $300 million to the state’s Emergency Road and Bridge Repair (ERBR) Program. Hosemann’s gas tax suspension proposal would not impact this additional injection of one-time funds for critical infrastructure projects.
Enacted in 2018, the ERBR Program is administered by the Mississippi Department of Transportation upon the advice of an advisory board made up of industry and local government leaders. The program was initially funded with $250 million in bonds. The Legislature appropriated an additional $89 million during the 2021 Legislative Session.
House Speaker Philip Gunn and Gov. Tate Reeves, who are also Republicans, want the Legislature to phase out the state income tax. Reeves said Friday that he might call a special legislative session to seek the income tax change if the House and Senate reach an impasse on the issue.
Legislators face deadlines late this month to agree on tax and budget bills for the year that begins July 1. The three-month regular session is scheduled to end April 3.
The Mississippi House and Senate have passed separate tax cut proposals. Senate Bill 3164 would eliminate part of the income tax, while House Bill 531 would phase out the income tax over several years. At least one of those bills must survive a Wednesday deadline to keep the issue alive during the regular session.
Both bills would reduce the 7% sales tax on groceries. Both would reduce the cost of car tags, with a larger reduction proposed by the House. The Senate bill includes one-time income tax rebates of $100 to $1,000, with larger rebates going to people with larger incomes.
Mississippi has a 7% sales tax on most other items. The Senate plan would not change that, but the House plan would increase it to 8.5%.
Increasing the sales tax would have a disproportionally larger effect on people with modest incomes. The poorest residents would see no gain from eliminating the income tax because they are not paying it now.
(Associated Press Contributed to this Article)