The 7-Eleven tax: gas, smokes and goodies

By Liz Pulliam Weston

If you want to drive yourself slightly nuts, try to figure out why there's so much variation among the states when it comes to taxing consumption.

Cigarette taxes are fairly easy: They tend to be lowest in tobacco-producing Southern states. But gas taxes aren't necessarily lower in oil-rich states, and sales taxes are all over the map. In two cases (Washington and New Jersey), states with the highest sales-tax rates in the country are right next door to states with no sales tax at all (Oregon and Delaware, respectively).

The crazy quilt that's resulted means that you can pay very different tax amounts for the same products, depending on where you live.

Think it all evens out? Consider this: A trip to the local 7-Eleven for a couple of packs of cigarettes, 10 gallons of gas and $10 worth of munchies will cost you $1.89 in state taxes in Georgia. The same taxes would total $8.62 in Rhode Island.

Tax research firm CCH, a division of publisher Wolters Kluwer, illustrates the differences with its annual survey of consumption tax rates across the nation. Here's what the survey found as of July 2006:

Gas taxes

The median rate for gas taxes -- the point at which half the states charge more, half less -- is 20 cents per gallon. But the range is pretty wide, from Georgia's low of 7.5 cents to Washington's high of 34 cents.

Also, a state's basic excise tax on gasoline may just be the starting point. Local taxes, sales taxes, environmental taxes and fees and inspection taxes can boost the toll.

Nowhere is that more true than in New York, where a basic 8-cents-a-gallon gas tax rate is inflated to about 42 cents by add-on fees and taxes. Hawaii's 16-cent rate, meanwhile, is more than doubled in many of the 50^th state's counties.

Having a higher-than-average tax rate doesn't protect residents from even more hikes. Nine states increased their toll on fuel this year, including seven -- Iowa, Maine, Nebraska, North Carolina, Pennsylvania, Washington and Wisconsin -- where the rates were already above the median. (The others boosting rates include Florida and Kentucky.) Only two states -- Nevada and Wyoming -- and the District of Columbia reduced their gas taxes this year compared to last.

States with the lowest gas taxes      

State	Tax	State	Tax
Georgia	7.5 cents	Florida	14.9 cents
Alaska	8 cents	Alabama	16 cents
New York*	8 cents	Hawaii	16 cents
New Jersey	10.5 cents	Oklahoma	16 cents
Wyoming	13 cents	South Carolina	16 cents

*New York's basic excise tax rate on gasoline is among the lowest, but other state taxes, including sales tax, petroleum business tax, spill tax and petroleum testing fees, inflate the total paid to about 42 cents per gallon.

States with the highest gas taxes

State	Tax	State	Tax
Washington	34 cents	Nebraska	27.1 cents
Pennsylvania	31.2 cents	Montana	27 cents
Wisconsin	30.9 cents	Maine	26.8 cents
Rhode Island	30 cents	Connecticut	25 cents
North Carolina	29.9 cents	Idaho	25 cents
Ohio	28 cents

Sales Taxes

New Jersey was the only state that recently increased its sales tax, which rose to 7% from 6% on July 15.

As with gas taxes, though, state sales taxes are often only the starting point, as cities, counties and other local jurisdictions often inflate the toll.

California's 6.25% basic sales tax, for example, is increased by a 0.75% levy that goes to local cities or counties, plus 0.25% for local transportation projects. Many cities and counties boost their rates even higher, so that the sales tax you actually pay can range from 7.25% in Atascadero to 8.75% in Union City.

Likewise, Alabama's 4% basic rate reaches 10% in Mobile once the 2.5% city and 3.5% county rates are added in, says CCH tax analyst Dan Schibley.

Five states -- Alaska, Delaware, Montana, New Hampshire and Oregon -- have no state sales tax. Among the rest, the median rate is 5%.

States with the lowest sales tax rates

State	Tax	State	Tax
Colorado	2.90%	New York	4%
Alabama	4%	South Dakota	4%
Georgia	4%	Virginia	4%
Hawaii	4%	Wyoming	4%
Louisiana	4%	Missouri	4.23%

States with the highest sales tax rates

State	Tax	State	Tax
Mississippi	7%	Nevada	6.5%
New Jersey	7%	Washington	6.5%
Rhode Island	7%	California	6.25%
Tennessee	7%	Illinois	6.25%
Minnesota	6.5%	Texas	6.25%

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