Lawmakers in Missouri’s state Senate approved a bill authorizing a November 2016 ballot question asking for an increase in the state’s gasoline excise tax.
If the state House of Representatives passes the bill, voters will be asked to approve an increase in the state’s gasoline tax by about 6 cents per gallon, from 17.3 cents per gallon to 22.9 cents. Approval from Gov. Jay Nixon (D) is not required to place the question on the ballot.
‘Imperfect Relationship’ with Road Use
Joseph Miller, a policy analyst with the Show-Me Institute, says gas taxes are an unfair form of taxation and are inefficient.
“Fuel use is correlated with road and highway usage, but differences in fuel efficiency make this an imperfect relationship,” Miller said. “For instance, a person who drove exclusively on urban streets, not the highways, would likely be giving a net transfer to a truck that simply hurtled across the state on an interstate highway.”
Miller says Missouri’s highway construction funds are highly dependent on state and national gas taxes.
“The fuel tax is the basis of highway funding in Missouri, as it makes up the largest portion of state funds for highways—about half—which are then used to match federal dollars for highway projects,” Miller said. “Aside from fuel taxes, [the Missouri Department of Transportation] also collects a motor vehicle sales tax and vehicle and driver’s license fees, which make up most of the remaining state-based revenue for highways. These, and federal matching dollars, are generally all MoDOT has for highway upgrades and maintenance.”
‘The Benefit Principle’
Mark Brandly, an economics professor at Ferris State University, says gasoline taxes are not the fairest way to pay for road repairs because of the difference in vehicles’ fuel efficiency.
“Gasoline taxes that are earmarked for road construction and repairs are based on the benefit principle of taxation: Those who benefit from the spending tend to pay the taxes necessary to fund that spending,” Brandly said. “Given the mileage differences in various vehicles, a cents-per-gallon tax does not fully lead to a benefit-principle tax. Some vehicles that have high mileage may pay a low tax rate relative to the amount of miles driven and relative to the amount of damage done to the roads.”
Suggests More Tolling
Brandly says the money for building roads should come from the people using roads.
“If you want various vehicles to pay the same rate per mile in order to possibly match tax payments closer to the benefits of having the roads, a toll road would be a better option than a cents-per-gallon tax,” Brandly said.
Michael Bates ([email protected]) writes from Tulsa, Oklahoma.
Denvil Duncan and John Graham, “Road User Fees Instead of Fuel Taxes: The Quest for Political Acceptability,” Public Administration Review, March 21, 2013: https://www.heartland.org/policy-documents/road-user-fees-instead-fuel-taxes-quest-political-acceptability/