Friday, June 27, 2008
Editorial: Gas tax increase wouldn't have to hurt
State taxes are a very small factor in the price that consumers pay at the pump.
From the RoundTable blog
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You have to admire the tenacity of Virginia's Senate Democrats, who have passed yet another proposal to increase the state gasoline tax, knowing full well that House Republicans will almost certainly kill it.
That tenacity is all the more admirable because Senate Democrats are absolutely right: A gas tax increase is the best, fairest and most efficient method of bringing new money to fund Virginia's increasingly dire transportation needs.
Democrats like Senate Majority Leader Dick Saslaw of Fairfax rightly point out that a gas tax increase means out-of-state drivers and tourists will help fund the roads they use.
But the logic goes further than that: Drivers, wherever they are from, almost certainly will not bear the entire brunt of any tax increase.
A 6-cent increase on gas taxes won't necessarily translate into a 6-cent increase at the pumps. In fact, an analysis of gas prices and taxes nationwide shows that there is almost no correlation between state gas taxes and the cost of gasoline.
The highest gas price in the nation is Alaska ($4.54 a gallon), which also has the lowest gas tax (8 cents a gallon). Yes, Alaska is a special case -- its location, size and geographic dispersion of the market, etc., are all greater factors in the price of gas than the low tax.
But that's true almost anywhere. State taxes play a minuscule role in determining the price paid by consumers.
Wisconsin has the highest gas tax in the nation at 32.1 cents, but Wisconsinites pay only 4 cents a gallon more than Virginians, despite a 14.6-cent difference in the state taxes they pay.
Next to Alaska, Wyoming has the lowest gas tax at 14 cents a gallon -- but drivers in Wyoming pay a penny a gallon more for gas than drivers in Wisconsin.
Virginia has the 39th lowest gas tax in the nation. That 17.5-cent-a-gallon tax has gone unchanged since 1986. Ten states with higher taxes than Virginia still pay less for gas.
The Senate plan to add only a penny a year for the next six years would almost certainly not result in more discernable pain at the pump for Virginians.
The gas tax doesn't have to be the whole answer, but it should be a major component.
If the tax reflected inflation, it would now be about 33 cents a gallon, bringing in about $1.6 billion in additional revenue every year.
House Republicans will kill the Senate's far more modest proposal.
In doing so, they will turn their backs on an idea that is fair, reasonable and effective.
Virginia consumers may believe Republicans are doing them a favor. Instead, they are ensuring that money that could be going to fix Virginia's roads is instead padding oil company profits.
