Tax Analysts Blog

Gas Tax is the Way to Go

Posted on Jun 19, 2013

Newspaper editorial pages rarely get tax policy right. Some, like The New York Times and Washington Post, are so driven by political agendas that they do not even pretend to understand the principles of sound tax policy. Unfortunately, smaller city newspapers all want to be The New York Times so they disregard tax policy as well. I was happy to the see the Des Moines Register is an exception. The paper opined that it was inappropriate to use sales taxes and gaming taxes to fund roads and highways. The paper asserted that the gasoline tax is the best way to pay for transportation services. The paper is right. The gasoline tax is the best way to pay for such services. We know that user fees are the most efficient way to pay for government services. But tolls -- the user fee for roads -- are largely impractical in most of the country. The gas tax is a proxy for road and highway usage. Gas taxes are not perfect. But they assign the costs of road maintenance more or less to those who use the roads. You drive more, you pay more. Wyoming, Vermont, California and other states have raised the gas tax in the past year.

The main problem with the gas tax is that as people drive more fuel efficient vehicles they use less gas. That is generally a good thing for everyone except the entities who have to pay for road maintenance. People still drive. They just don't use as much gasoline. Mileage taxes are actually an ideal way to pay for transportation. But short of putting a GPS in every car, it is difficult to determine how many miles are driven in a particular state. I suspect that there is not a lot of support for putting a GPS in everyone's car -- at least not right now.

Indiana considered imposing a licence plate tax to fund roads. Since having a car licensed has no bearing on the amount the car is driven, taxing plates is asinine. Using the sales tax -- as other states have done or proposed recently -- decreases the costs of using the roads. It encourages the use of roads without any obligation to pay for such use. Using gaming taxes is, well, evil. Gaming taxes place the costs of paying for government on the poor and addicted. That is wrong. And the Des Moines Register should be applauded for saying so.

Read Comments (4)

amt buffJun 19, 2013

A gas tax would help alleviate traffic congestion and promote advanced car
sharing services using smartphones. Then advocates of big government could give
the poor and the fraudsters free smartphones with free ride sharing credits.
They would literally be free riders!

Gary JacobsenJun 21, 2013

How about including in your next article some information on an alternative
highway tax several states are considering -- an additional tax on hybrids and
electrics. These people are going to adversely affect our ability to drive,
but no one is reporting this information to us.

David BrunoriJun 23, 2013

Gary, That is a great point. The main alternative is a mileage tax. You are
taxed on how much you use the roads. That is a theoretically great way to pay
for roads. But there are a lot of issues. If I live in Virginia but drive a
lot in DC or Maryland my odometer will not reflect that. The only way to do
that right now is to put a gps in every car to apportion the miles. But that is
very dangerous.

edmund dantesJun 23, 2013

I have the perfect solution: Eliminate all the ethanol subsidies and divert
the money to roads instead. This would improve fuel economy across the board,
possibly lower costs, and free up billions that are being wasted on turning
food into fuel.

The government has demonstrated decisively that it can't be trusted with the
data from a gps in every car. That idea is off the table for at least a decade.

Also, it's beyond stupid to offer tax incentives for hybrids with your left
hand while you have special taxes on hybrids with your right hand because they
don't pay a "fair share" of road use costs. Only the government could come up
with such contradictory policies. The fact is most wear and tear on the roads
is from heavily loaded trucks, not passenger cars. BTW, I don't own a hybrid
and never will, so it isn't self interest talking here.

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