Title: State Gasoline Taxes: Built to Fail, But Fixable – ITEP
Headings: State Gasoline Taxes: Built to Fail, But Fixable
State Gasoline Taxes: Built to Fail, But Fixable
How Gas Taxes Work
A Vital Transportation Revenue Source
Challenges Confronting State Gas Taxes
Consequences of Inaction
Recommendations for Reform
Recent Progress
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Content: As a result of these deficiencies, the ASCE estimates that Americans waste the monetary equivalent of $32 billion in travel time delays each year, and another $97 billion on vehicle operating costs. Given all these problems, it should come as little surprise that even business leaders—a group hardly enamored with taxes—often come down on the side of raising state gas taxes in order to fund a more efficient transportation system. When gas taxes are allowed to stagnate, the consequences are not always limited to state transportation systems. Recently, a number of states have enacted long-term raids on their general funds, where a certain percentage of tax revenue usually reserved for education, human services, and other public priorities is siphoned off to make up for lagging gas tax revenues. Some lawmakers have pointed out the problems with this approach, but far too many view a general fund Band-Aid as an easy way to delay politically difficult, but long-overdue reforms to the gas tax. Recommendations for Reform
Despite the dismal condition of so many state gas taxes, there are a few straightforward reforms that states can use to fix these broken, but vital, revenue sources: • Rising fuel efficiency and construction costs have significantly reduced the purchasing power of state gas taxes. The first and most obvious step that states should take to offset these declines is to increase their gas tax rates. • An increase in state gas taxes, however necessary, will be of little help in the long-term unless steps are taken to ensure that the tax can withstand future increases in fuel efficiency and construction costs. Restructuring state gas tax rates so that they grow over time can help alleviate this problem.