Average gas prices in Utah are currently $4.22 a gallon, compared to the national average of $3.83. Historically, Utah has always had higher gas prices than many other states and, over the last year, Utah’s average gas price has continuously been higher than the national average. This seems uncharacteristic for a state which prides itself on its economic performance. This is, in part, a consequence of Utah’s 34.5 cent state gas tax – the 17th highest gas tax in the nation. Although the gas tax is a painful addition to an already-expensive and essential commodity, the revenue generated is invaluable to the state for maintaining its roads. The gas tax actually only partially funds the state’s transportation budget to pay for road maintenance and major transportation and infrastructure projects. Further reducing or eliminating the gas tax would not eliminate the need for the revenue. The General Fund , which is funded by sales tax, already bridges the gap between gas tax revenues and transportation budget needs. Any reduction or elimination of the gas tax would simply exacerbate how much the general fund would need to supplement the transportation fund. When the general fund is running low, the state has no choice but to raise taxes, cut budgets, or both.
The gas tax, and the Road Usage Charge that will eventually replace it, is a user fee, and is the most equitable way to fund transportation. While other states may impose a lower gas tax, chances are their general fund supplementation from other taxes is higher. Here it is worth noting that the constitutional earmark on income tax revenues in Utah also means that Utah operates with a restricted general fund, limiting the extent to which the transportation fund can be supplemented.
While maps such as the one above suggest that Utah could or should reduce its gas tax, the reality is the revenue must be collected somewhere. Consequently, states with lower gas taxes have higher property, sales or income tax rates.
|State||Gas Tax (cents)||Personal Income Tax||Corporate Income Tax||Property Tax (per $1,000 of income)||Sales Tax (per $1,000 of income)|
Rates marked in red indicate they are higher than Utah
Source: Rich States, Poor States
While paying taxes at the pump is painful, it continues to be the necessary means of collecting vital revenue. Any change to the gas tax may look good on gas station signs along the interstate, but the tax will simply be reimagined in a new, higher, and more subtle tax or fee elsewhere. A prime example of this is the growing proliferation of so-called “Transportation Utility Fees” by local governments. Your Utah Taxpayers Association supports the gas tax and the forthcoming Road Usage Charge as reasonable and equitable fees for the roads we all use.