A sweeping Republican proposal to fund transportation and cut taxes would flatten income tax rates, lower the gas tax and raise new funding for roads by applying the sales tax to gasoline.
The goal of the plan, which is subject to change, is to hold gas prices steady by lowering the state’s 9.18 percent minimum markup on gas prices, according to Rep. John Macco, R-Ledgeview, chairman of the Assembly Ways and Means Committee.
That means more money for the transportation fund could come from the bottom lines of companies that benefit from higher retail gas prices under the minimum markup law — both large national retailers and locally owned stores. Critics, however, say the money could also end up coming from consumers at the pump.
One of the goals of the proposal is to cut borrowing in Gov. Scott Walker’s 2017-19 budget plan from $500 million to $200 million.
In addition to the transportation funding changes, the plan also includes the first steps in eventually creating a 4 percent flat income tax over the next 11 years, Macco said. He declined to offer specifics.
Under the current thinking, the gas tax would be reduced by 4 to 7 cents per gallon, Macco said. It is currently 30.9 cents per gallon. Also the minimum markup on gasoline — currently 9.18 percent — would be reduced so as to bring gas prices down another 7 cents, Macco said.
The Depression-era Unfair Sales Act prohibits retailers from selling merchandise at less than cost and also sets a minimum price for tobacco, alcohol and gasoline.
The gas price reductions would be offset by applying the 5 percent state sales tax and any local sales tax to gasoline, which currently costs $2.26 in Madison.
Todd Berry, president of the Wisconsin Taxpayers Alliance, said the proposal is a commentary on how far Assembly Republicans have to go to persuade Walker to support increased revenue for roads, especially when he previously said he would support a gas tax increase if there was an offsetting tax cut.
“It is truly amazing and amusing the number of hoops they have to jump through to effectively raise the gas tax and index it,” Berry said. “You can’t fault them for the creativity or the cleverness of it.”