Gas tax rises to state limit

Level is highest allowed by law

Gas taxes are as high as they can go, again. But they might have gone a lot higher.

On Tuesday, North Carolina's gas and diesel fuel tax returned to its legal limit under state law, 30.15 cents per gallon.

That was an increase of 0.2 cents per gallon -- a penny for every 5 gallons -- more than we paid during the last half of 2007.

The N.C. Department of Revenue would have set the new tax rate 3.53 cents higher -- at 33.68 cents -- if Gov. Mike Easley and the legislature had not agreed last year to cap it at 30.15 cents.

A portion of the tax is indexed to rise and fall with wholesale fuel prices.

North Carolina's gas tax, its primary funding source for road improvements and other transportation needs, is one of the highest in the nation. As of July 2007, only 14 states had higher gas tax rates, according to the American Petroleum Institute.

But, compared to some of its neighbors, North Carolina sets a low rate on its No. 2 source of transportation money: the highway use tax collected on car sales.

State traffic counts and road building costs are increasing steadily, but improved fuel economy has reduced gas sales in recent years -- keeping tax collections flat. State leaders are looking for new ways to catch up with road and transit needs.

Average retail prices (including taxes) hit $3.021 for self-service regular at Triangle gas stations today. That's down almost 3 cents since the first week of December and about 73 cents more than we paid a year ago.