INDIANAPOLIS (AP) -- Responding to the Midwest's soaring gasoline prices, the governor on Tuesday suspended Indiana's sales tax on gas for up to 60 days, a move that will save motorists between 7 and 10 cents per gallon.
Democratic Gov. Frank O'Bannon used a 1981 law -- created in the wake of the gas crisis of the 1970s -- to declare an energy emergency.
The state's 5 percent sales tax on gas will be suspended July 1, giving the state time to notify the more than 4,000 gasoline retailers in Indiana.
"Spiraling gas prices have really caused an undue burden on the people of Indiana," O'Bannon said, standing outside a gas station.
"We're looking at ways as to why the Midwest stands out so much higher than the rest of the country."
Gas prices have jumped as much as 50 cents a gallon in some areas of the Midwest, nearly five times as much as increases nationwide. Prices in Indiana recently have moved to more than $2 per gallon for premium grade gasoline.
O'Bannon said he'll monitor the prices and, if they drop, he'll reinstate the tax before the 60 day period ends. If the high prices continue, he has the option of extending the tax suspension another 60 days. Anything after that has to be approved by the Legislature.
Money from the gas tax goes to the state's general fund, and O'Bannon said a 60-day suspension would likely cost the state $11
million. But, he said, the high cost of gas has already provided the state with more than enough money to absorb the $11 million
On the Net:
AAA nationwide gasoline price charts: http://208.13.208.