Are gas tax hikes a good idea?

Author:
Publish date:
Updated on

The federal tax on gasoline dates to 1932, when President Herbert Hoover agreed to add a penny to help build and maintain an interstate highway system. The plan was to eventually abolish the tax. But when has government ever given up a tax it likes?

Instead, its been raised over the years to today’s federal tax of 18.4 cents a gallon, with 24.4 cents for diesel. While there’s been no new proposals to raise the federal gas tax since President Trump took heat and backed off the idea last year, state gas taxes that often exceed the federal tab are coming into question.

An example is Chicago Mayor Rahm Emanuel’s recent press conference urging Illinois lawmakers to hike the state gas tax by 20 to 30 cents a gallon to pay for road construction and repairs.

(If you’ve driven as many Chicago streets as I have recently, he sure could use the money!)

Illinois last raised the state gas tax from 16 to 19 cents, in 1990. But a patchwork of local gas taxes along with layers of state and local sales taxes piled on top means Illinoisans get effectively doubled-taxed at the pump. So they now pay 37.3 cents per gallon in taxes, on average, to fill up — not including the federal 18.4 cent gas tax.

If one adds Emanuel’s 30-cent suggestion, Illinoisans would pay the highest total tax burden on gas in the nation, at a hefty 67.3 cents per gallon average. Ouch!

Illinois may be a dramatic example, but it’s certainly not alone. In Ohio, after just two hours of public testimony, a committee looking for solutions to Ohio’s highway funding gap found consensus on one potential revenue source — surprise, surprise — raise the Ohio gas tax. The panel did not recommend how much, however.

The Governor’s Advisory Committee on Transportation Infrastructure did not find agreement on any other ways to raise money for Ohio’s road system, but additional sources of revenue could be added to a report being compiled on the group’s work.

Other ideas discussed included indexing the gas tax to construction inflation rates; assessing highway user fees on alternative-fuel vehicles such as hybrid and electric cars; how and whether to control how local governments and the Ohio Department of Transportation use money for roads; and whether Ohio needs more toll roads.

The Buckeye State’s current rate is 28 cents a gallon, last raised in 2005. The administration must get a new transportation budget proposal to lawmakers quickly. The General Assembly needs to pass it by March 31.

The Boating Associations of Ohio and other groups are urged to take a position, presumably one supporting more gas tax money for the state’s roads. It’s not any easy issue, and so far, BAO has not reached a consensus, perhaps waiting for some concrete numbers.

Confusing the issue are other options to consider. For example, enacting more tolls. Increasing vehicle licensing fees. Finding a way to charge drivers for miles. The latter would certainly help account for the growing use of electric vehicles that don’t pay any taxes.

And there’s the overriding question about how much of the gas tax goes to the roads versus subsidizing things such as light rail projects and mass transit vehicles that, incidentally, also don’t pay gas tax. Further, if mass transit is continually expanded and less private vehicles are on the roads, there will always be a diminishing income stream from gas taxes.

I’ve cited two states, but gas taxes may be a dilemma in other areas this year, particularly since the price at the pump is considered favorable. That makes it a little easier for lawmakers to propose and support increases. But it’s never easy to back hiking taxes, particularly in transportation bills that can often include other unrelated expenditures.

There’s no doubt every state needs to raise enough money to build and repair roads and bridges. As a boating industry, we move our supplies and finished products primarily over state and federal highways. Most of our customers move their boats on roads. So we face a serious question about whether to openly support a gas tax hike and at what amount.

I don’t propose to have your answer. You’ll have to decide in each case. So on this issue let me say to you what I tell my wife each time she leaves for the beauty parlor: good luck to ya!

Related