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Indiana Governor May Repeal Natural Gas Tax This Fall

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 periods.

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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