Rounds under fire for new gas tax

From the Argus Leader:

Two Democratic state senators Monday called on Gov. Mike Rounds to rescind what they call an unlawful new tax imposed by the administration on certain blends of ethanol.

In a memo sent April 17 to state gas outlets, the Department of Revenue and Regulation told owners they would need to use a new tax return for all mid-grade ethanol blends by May 1. The Blender Pump Return Tax requires retailers to collect an additional 20-cents-per-gallon tax from consumers who use blender pumps to create their own blends.

Senate Minority Leader Scott Heidepriem said the new tax is unlawful because it conflicts with an existing statute about ethanol taxation. Heidepriem said the Legislature rejected similar proposals earlier this year, and he accused the governor of using executive fiat to ram through an unpopular tax.

"This proposal defies the Legislature. It defies existing law, because it's already taxed. But worst of all, it defies logic," he said.

The Argus Leader squeezed in a quote from Representative Hal Wick, and then they let Senator Jerstad fire away at Rounds:

Rep. Hal Wick, a Sioux Falls Republican, said that could make the law unconstitutional.

Rounds complained Monday that lawmakers and lobbyists defeated a measure that would have addressed the issue during the last legislative session.

"They killed our proposal before we even had a chance to get it done," Rounds said.

Jerstad said that was the point: Lawmakers killed the increase, and now Rounds has gone ahead and ordered it anyway.

"It seems rather dictatorial to me," she said.

Now here is the issue they are ripped about:

Rounds denied the memo constitutes a new tax. He said it is "a new tax return form, not a new tax."

He said retailers were concerned about properly reporting their taxes with a blender pump system. That's because E85 is taxed at 10 cents a gallon while while other blends are taxed at 20 cents a gallon.

There are a small number of blender pumps in South Dakota - fewer than 20, according to Department of Revenue estimates - but ethanol supporters champion their greater use.

The pumps allow consumers to create a fuel blend from two different tanks. One tank might contain E85 and another standard unleaded gasoline. The blender pump would allow a consumer to mix the two fuels together for a custom blend.

The state taxes any blend of more than 75 percent ethanol at 10 cents a gallon. Blends of 10 percent to 75 percent are taxed at 20 cents a gallon, and regular gas is taxed at 22 cents a gallon.

Would it not be fair to tax all fuels at just one rate? And with today’s high prices, perhaps that rate should be zero.