by Howard Stephenson
by Howard Stephenson
It’s time to double Utah’s motor fuel tax.
There. I said it.
The President of Utah’s 85 year old tax watchdog organization is calling for the biggest highway tax rate hike in Utah history – or for that matter the history of any state.
No, this column was not written on April fool’s day.
Hopefully it won’t get me fired.
All I’m asking is for you to hear me out on this. When I’m done, I’m confident you’ll agree with this proposal. You may not like it at first, but you’ll know it’s right because it’s offset by a dollar for dollar decrease in other taxes.
The needs are obvious.
Improving the capacity of Utah’s transportation system has been a top priority of the legislature, the governor, and many business groups including chambers of commerce, Utah Trucking Association, and the Utah Taxpayers Association. Our transportation needs are painfully obvious.
Unfortunately, most supporters of transportation expansion have simply focused on more money from general sources and consequently, the legislature funded about $700 million this year in general fund revenues for transportation purposes.
The Utah Taxpayers Association has called for congestion pricing and tolling to increase capacity of existing congested highways such as I-15 through Utah, Salt Lake, and Davis counties so that whatever new money is available can be used to build new roads in high-growth areas.
But implementation of these new tools won’t divert enough money to satisfy highway growth needs and unfortunately, the diversion of hundreds of millions of dollars annually from the general fund is counter productive.
Time to end or seriously curtail the general fund subsidy of highways
My proposal to double the current 24.5 cent gasoline tax to an even 50 cents would bring a rational approach to ensure that all highway users are paying more of the real cost of their highway usage.
Conservatives have long quoted the axiom “That which government subsidizes will grow faster than it would have without the subsidy.” This is no more true than in the area of transportation.
Just as it doesn’t make sense in a desert state to reduce water bills by subsidizing them through general property and sales taxes, it doesn’t make sense to reduce the cost of vehicle miles traveled through general fund subsidies.
Highway users should be the first to support this proposal
Those who have benefit the most from congestion relief – employers, retailers, and trucking firms – must realize that the more the real costs of traveling our highways are borne by those who use them, the lower the non-essential use will be, and the less congestion and accidents there will be.
I was pleased to read of American Trucking Associations President Bill Graves testimony before congress announcing the trucking industry is willing to pay higher fuel taxes as long as the money generated is spent to improve the nation’s highway infrastructure.
“We are prepared to pay,” Graves said. “We do favor fuel tax as a method of payment . . . and we believe in a program that is tied to system use. The sense now is that given the right plan, there could be some great things accomplished.”
I’ve also been talking with representatives of the oil companies who tell me that they don’t oppose cents per gallon gas tax hikes if the money is used for transportation purposes. What they don’t support is taxes based on a percent of the price, such as a motor fuel sales tax.
No net tax increase
There is another element to this proposal which ensures that a doubling of the state gas tax does not become a net tax increase. I propose that $350 million of the current $700 million general fund tax subsidy for transportation be used to cut individual income taxes. This would continue Utah’s effort to become more competitive for good-paying jobs by reducing the new, lower 5% single rate to 4.5%.
In other words, the $350 million currently generated for highways from the general fund on a temporary basis would be made permanent through a gas tax hike while state income taxes are cut by the same amount. Since state income taxes are earmarked for education, the $350 newly available in the general fund would be shifted to the education fund to replace the loss of income taxes in that fund. This would ensure that education budgets are not hurt by this change.
I would like to hear your responses to this proposal.