Indiana Gas Tax Suspension Explained: What Mike Braun’s Plan Means for Drivers

The big news yesterday was that, after weeks of begging and pleading from us, the governor finally came out and announced he is suspending the sales tax on gasoline. Now we’re about to give you takes you’re not going to find anywhere else, because the Republican Party and these politicians who have done absolutely nothing, said absolutely nothing, and did not pressure the governor publicly over the past three or four weeks are doing victory laps today. “Oh, isn’t it great? Oh, we’re leading affordability.” Bull. We’re going to get into that. But first, let’s explain exactly what went down.

What the Gas Tax Suspension Actually Does

Okay, so let’s talk about what Braun actually did and then get into what you need to know about it. Yesterday Braun announced the suspension of the sales tax on gas. Don’t forget that in Indiana there are three taxes on gas. You have the federal tax, which Braun and the Republicans in Indiana state government have nothing to do with. That’s 18 cents a gallon. Every gallon of gas you buy, 18 cents goes to the federal government. Then there are two Indiana-based taxes on gasoline. The first tax is the special excise tax on gas, which comes out to about 36 cents, or soon to be about 37 cents, per gallon. Then there is the sales tax on gas. There is a sales tax on gas just like there’s a sales tax on pretty much everything you buy in the state of Indiana, which is 7 percent. Of course, the big scam with that is the more gas goes up, the more the sales tax on gas goes up, because 7 percent of a higher number means more money. That is what Braun suspended yesterday for 30 days. It will run through, I believe, May 9. The other gas taxes will continue to remain in place. It’s believed this will save you roughly 17 cents per gallon over the next month. Hope Braun didn’t injure himself going kicking and screaming to doing the bare minimum. Here’s what Braun said yesterday, according to the Capital Chronicle: “I am declaring a gas tax holiday to give users relief from the pain at the pump from high gas prices. Affordability is my top priority.” Okay. If affordability was your top priority, you wouldn’t sign a disastrous property tax bill loaded with future local income tax increases, where referendums are going to be flying left and right this fall raising people’s taxes. Ultimately, assessment increases are going to eat up any relief people got this year. By the way, speaking of that, a lot of people have reached out to me about how their property tax bill went up this year. Maybe we’ll talk about that in future shows. For people with home values above $300,000, many of them are seeing big property tax increases. If Braun cared about affordability, he wouldn’t be proposing $6.5 billion in tolls on I-70. If he cared about affordability, he wouldn’t be proposing massive tax increases on the people of Northwest Indiana to pay for the Bears stadium. If he cared about affordability, he wouldn’t have signed a bill last year that allows for-profit utility companies to raise your rates while they experiment with unproven nuclear technology. And if Braun cared about affordability, he would have suspended the sales tax on gas a month ago when he first started talking about it. Remember, Braun laid out very clear parameters for suspending the sales tax on gas, and we are weeks past the point where those parameters were not met. He said if the Strait of Hormuz wasn’t open and if gas had not gotten more affordable, then action might be needed. Neither of those things has happened. At this point the Strait of Hormuz is all over the map. It’s on, it’s off, it’s on, it’s off. So Braun doesn’t care about affordability. He did this because the pressure got so intense. And don’t underestimate the pressure that could have come from the Trump administration. Let’s face it, the Trump administration is contributing to the spike in gas prices. Look, I don’t care how you view Trump. Maybe you think the war with Iran is the greatest thing ever. Maybe you think the proxy war we’re fighting for Israel is the greatest thing ever. You’re entitled to that opinion. But it is irrefutable that the price of gas went up when Trump engaged in this military conflict, which led Iran to shut down the Strait of Hormuz, attack oil fields, and so on. So don’t underestimate the pressure Braun may be getting from Washington to try to offset the price of gas and keep Trump from looking worse politically. Speaking of being subservient to Trump, I’ve got a column coming out soon in the Indy Star about Braun spending $500,000 through a super PAC to defeat incumbent state senators while not lifting a finger through that super PAC to help us last year with property taxes or other issues. We’ll get to that in the column.

How Gas Taxes Work in Indiana

Now let’s talk about the history of suspending the gas tax, and we’ll get into this more with Niki Kelly when she joins us because she’s a great historian on state issues. The estimate from the Braun administration is that Hoosiers’ savings this month could reach $50 million. Think about that. Fifty million dollars in taxes in a single month. What’s it going to? Our roads certainly aren’t getting better. Is it going toward the Bears stadium? Possibly. Is it going to the Mid-States Corridor? Maybe. The ability to suspend the sales tax on gas dates back to a 1981 statute. That’s 45 years ago. The law references an existing or projected shortfall of at least 8 percent of motor fuel or other energy resources that threatens to seriously disrupt energy supplies to the extent that life, health, or property may be jeopardized. In 2000, then-Governor O’Bannon suspended the sales tax on gas for a very brief period of time. To my knowledge it was never challenged in court and he was able to do it. By the way, the price of gas back then was around $2 a gallon when that emergency occurred. We’ll get into that more with Nicki Kelly later. Then in 2007 things got interesting. During the Iraq War, when gas prices spiked above $4 a gallon, Mitch Daniels asked then-Attorney General Greg Zoeller whether he had the legal authority to suspend the sales tax on gas using the 1981 statute. Zoeller said no. He wrote that it was clear a suspension of the sales tax was not among the powers listed in the statute and did not fall within the same category of actions allowed by the 1981 law. Without further legislative action granting the governor the authority to suspend the tax, he believed that power was not intended in the statute. Attorney general opinions aren’t binding. They’re advisory. So Zoeller could have been wrong. But that’s what Mitch Daniels was told in 2007. The statute wasn’t challenged in 2000 with O’Bannon. Braun was asked about this 1981 statute when he made the announcement yesterday. He essentially ignored the issue and said, “We feel this is within the latitude of what I’m able to do.” When asked about the statute, he repeated that he believed it was within his authority. He also said the emergency was created by conditions outside our control and that it was done in Washington, D.C. Well, who runs Washington right now? For all the people who say I’m mean to Republicans, Braun himself said this was created by Washington. Republicans control all branches of government there. Reasonable people can disagree on the proxy war between Israel and Iran, and I’m willing to hear both sides. But I’ve yet to hear how the United States is safer because of it, or what specifically triggered it beyond things we’ve known for decades, such as Iran being a state sponsor of terrorism. Braun also didn’t answer how the 8 percent rule in the statute would hold up if the decision is legally challenged. Who’s going to challenge it? I don’t know. We’re scheduled to have Democrat state representative Carey Hamilton on the show tomorrow to talk about where Democrats stand on the suspension. So those are the basics of what happened yesterday: what tax was suspended, how much it might save you, and the mechanics behind it. Now let’s talk about the things you’re not going to hear anywhere else. First, the governor is admitting what we’ve said for years. The gas tax is a scam. By suspending it, he’s admitting the state doesn’t actually need the money. If it were vital to the state’s survival, he wouldn’t be able to suspend it, and he certainly wouldn’t be doing it by executive order. Braun’s action confirms the point we’ve been making. They’ve always said I’m a shock jock doing this for ratings or clicks. But notice how often they end up doing the exact thing we’ve been arguing for. We’ve been screaming about this for years, and specifically about Braun for weeks. He finally admitted it. The state has plenty of money. It can function with less. They just don’t want to give it up. So the question for Braun on May 9, when the suspension expires, is simple. If he reinstates the sales tax on gas, why? If you’ve admitted the state can live without it, why bring it back? Are you admitting the government will tax people as much as it thinks it can get away with? I think that’s exactly what Braun and the Republicans are saying. They’ll take as much of your money as possible as long as they believe they can get away with it. The other part we need to talk about is the Republicans in the General Assembly and statewide offices who said nothing for weeks. We’ve been advocating for people and pushing this issue. Where has the legislature been? Yesterday, Senate leadership reacted as though Braun had performed some heroic act. According to the Capital Chronicle, Senate President Rod Bray said Senate Republicans have led on affordability for years and helped create one of the lowest costs of living in the country. What planet is Rod Bray living on if he thinks life in Indiana is affordable right now? That’s the perspective of a wealthy attorney who also leads the Senate part-time. For him, maybe money isn’t an issue.

Why the Suspension Happened and What Comes Next

He said the state’s low cost of living has helped Hoosiers, but the recent spike in gas prices is putting pressure on budgets and he supports temporarily suspending the sales tax on gas. Where was that statement a month ago? Bray hadn’t said a word about this. Neither had other Republican lawmakers. We’ve been begging them for weeks to hold Braun to his pledge. He should have done this in mid-March. Instead, people lost weeks of potential savings based on the standard he himself set. Travis Holdman, the Senate’s tax chairman, also weighed in. Remember, he’s up for reelection. He claimed the legislature has worked to maintain Indiana’s low cost of living. What exactly have they done to maintain affordability? My utility bills have skyrocketed. The government approves those increases. Property taxes have skyrocketed. The government approves those too. Now the governor is proposing $6.5 billion in tolls for a major interstate project. The legislature gave him the authority to pursue that. Meanwhile people in Northwest Indiana could face massive tax increases to subsidize a stadium for a multibillion-dollar corporation. I would love for Travis Holdman to come here and explain how the government has improved affordability while taxes and costs continue rising. These are choices. Yet during this election season, many challengers running against these incumbents aren’t running on anything meaningful. I’d love to support candidates running on big reforms, but many of them simply aren’t. Holdman had five or six weeks to pressure Braun to suspend the tax. Then, hours before Braun did it, he issued a statement calling on the governor to provide relief by suspending the tax. Six weeks of silence, and then suddenly a statement when he knew the decision was coming. I also saw Micah Beckwith, Andrew Ireland, and others celebrating the move. Where were they weeks ago? Why weren’t they leading? Why did they let people struggle for weeks? And now that they’ve admitted the tax isn’t necessary, why isn’t the conversation immediately shifting to a permanent repeal? Government behavior like this is frustrating. It’s disappointing to see politicians who did nothing for weeks now taking victory laps while people were struggling the entire time.