As you travel around the U.S. this summer, prepare to pay more
for everything from gas to bourbon. Faced with budget deficits, a
sharp drop in federal funds and outdated infrastructure, states are
hiking sales and excise taxes -- in some cases, for the first time
Motorists will be hard-hit. This year, Wyoming raised its gas
tax to 24 cents from 14 cents per gallon. California's excise tax
on gas rose 3.5 cents, to 39.5 cents a gallon. Vermont raised its
gas tax by nearly 6 cents, to about 32 cents per gallon.
If you enjoy a drink with dinner, sin taxes could also squeeze
your budget. Last year, Washington State privatized liquor sales --
a move that usually results in lower prices -- but coupled it with
a tax increase on distilled spirits of up to $35.22 per gallon. The
tax hike, paid by commercial establishments but passed along to
customers, has increased the price of drinks purchased in bars and
restaurants, along with bottles bought in a store, says Scott
Drenkard, an economist with the Tax Foundation.
Smokers may want to quit. In 2012, Illinois more than doubled
its excise tax on cigarettes to $1.98 per pack. That levy, combined
with Chicago's local tax, adds $4.66 to the price per pack. In New
York City, state and local cigarette taxes add $5.85 to the price
of a pack. "Cigarettes cost around $11 a pack in New York,"
Drenkard says. "That surprises people."
Taxes on hotels and rental cars are popular with state lawmakers
because they're typically paid by nonresidents who can't vote
against them. Virginia's recently enacted transportation funding
bill added a 3% hotel tax to existing tax rates for hotels in