Indiana Governor May Repeal Natural Gas Tax This Fall
Natural gas customers in Indiana may be seeing a 5% reduction in
their heating bills this winter, courtesy of a proposed tax
exemption by Gov. Frank O'Bannon. O'Bannon said last week that he
may suspend the state sales tax similar to a ban he enacted on
gasoline sales in June.
"We are, and have been in the last two weeks, discussing the
news that price hikes could be dramatic," said O'Bannon 's
spokeswoman Cheryl Reed.
Faced with skyrocketing natural gas prices this spring and
summer, Indiana's utilities have asked state regulators for
permission to pass along the price hikes to consumers. For
instance, Citizens Gas & Coke Utility estimates that for its
customers, a bill could go $30 a month higher --- if the Midwest
winter is a mild one. State law now permits gas distribution
suppliers to pass along their natural gas purchasing costs to
consumers. Citizens said that the immediate cost increase is about
25%, which would make a $105 natural gas bill jump to about $130.
O'Bannon suspended the sales tax on the price of gasoline on
June 26 under a never used 1981 law that granted the state governor
the authority to suspend the sales tax on energy during a crisis.
O'Bannon said the high prices at the pump were such a crisis, and
when he suspended the sales tax, it cut pump prices from 7 cents to
11 cents per gallon. Market factors also contributed to lowering
the price after that. The initial 60-day suspension has already
cost the state more than $22 million in tax revenue. The state law
allows the governor to suspend the energy tax for two 60-day
Now, O'Bannon aides are researching whether "energy" in the 1981
law also refers to natural gas.
Coincidentally, O'Bannon is up for re-election this year, and
sources say that if O'Bannon suspends the natural gas tax, it may
occur during his re-election bid this fall against Republican David
McIntosh. Thad Nation, O'Bannon's campaign spokesman, said a
natural gas tax suspension would not be done for political reasons.
Carolyn Davis, Houston
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