Research & Commentary: Hiking Missouri’s Gas Tax Will Not Solve Road Funding Woes

Published April 4, 2016

Missouri legislators are now considering a substantial increase in their state’s motor-fuel taxes. The tax hike, proposed by state Sen. Doug Libla (R-Poplar Bluff) recently passed in the state’s Senate and is expected to receive a final vote in early April. The current proposal, if approved by voters in a statewide referendum in November. would increase the state motor-fuel tax by 5.9 cents, increasing the tax from 17 cents per gallon to 22.9 cents per gallon.

This is a significant increase from Libla’s previous proposals, which called for an increase of 1.5 cents for most motorists and 3.5 cents for diesel drivers. The hike would move Missouri’s state motor-fuel tax above the national average, which is currently 20.88 cents, according to the American Petroleum Institute. The plan would also make Missouri’s tax higher than regional neighbors Arkansas, Illinois, Oklahoma, and Tennessee.

Gasoline taxes are ineffective, regressive, and have increasingly left transportation systems shortchanged. In a Show-Me Institute Policy Study on gasoline taxes, Joseph Miller argues the rise of fuel-efficient cars has decreased motor-fuel tax coffers. “The main problem is that the user-fee funding base originally set up to fund highways has failed to keep pace with the increasing expenditures required to build and maintain the state’s most-trafficked roads and bridges,” wrote Miller. “The largest portion of that funding base is the state’s 17 cent per gallon fuel tax, revenue from which has been in long-term decline, as drivers choose more fuel-efficient vehicles and economize on travel.”

Gas taxes also disproportionately shift the burden to low-income drivers, a group that typically owns older, less fuel-efficient vehicles. According to Americans for Prosperity, households with incomes of less than $50,000 per year currently spend more than 20 percent of their after-tax income on energy. Although gas prices are comparatively low today, there are no assurances they will remain this way, whereas the gas tax hike would be permanent.

Wendell Cox and Ronald Utt argue gas taxes have a stronger effect on lower- and middle-income families than they do on the wealthy. The tax could also cause low-income families to drive less, which could reduce employment options. Americans for Prosperity estimates lower gas prices amount to approximately $100 in additional spendable income per month for an average family, which means the recent nationwide drop in gas prices could potentially lead to an additional $100 billion of economic growth.

Critics of the gasoline tax increase proposal say legislators should not use the current dip in gasoline prices as an excuse to hike taxes, and they note a tax hike would raise prices on goods and services throughout the economy, not just on gasoline. These increased costs are passed on to consumers.

Miller makes several recommendations for Missouri legislators to consider. “Longer-term solutions for MoDOT’s funding issues could include alterations to the Missouri state highway system itself, changing priorities at MoDOT, implementing a more wide-ranging tolling program, or exploring mileage-based user fees,” wrote Miller.

As the rise in fuel efficiency continues, motor-fuel tax revenues will continue to decline. Missouri will have to explore more modern and efficient ways to fund road construction and traffic infrastructure, which should include privatizing roads and establishing toll systems. In several cities, transportation agencies are using congestion pricing – varying toll prices based on congestion – to manage demand and limit traffic problems.

The following documents provide additional information about how motor-fuel taxes are applied and their effect on the economy.


Funding the Missouri Department of Transportation and the State Highway System
In this Policy Study, Joseph Miller of the Show-Me Institute conducts a thorough analysis of the current state of Missouri’s highway system and the challenges it faces in the near future.

Alternatives to the Motor Fuel Tax 
This report, prepared by the Center for Urban Studies at Portland State University and submitted to the Oregon Department of Transportation, evaluates potential alternatives to motor-fuel taxes. The report also identifies the economic and technological problems that must be addressed when designing alternative revenue sources.

Designing Alternatives to State Motor Fuel Taxes 
Writing in Transportation Quarterly, Anthony M. Rufolo and Robert L. Bertini consider the future of motor-fuel taxes as more fuel-efficient vehicles become available. They also report on the economic effects of road pricing as a substitute for fuel taxes.

Paying at the Pump: Gasoline Taxes in America 
Jonathan Williams argues gas taxes can be an effective means of funding transportation improvements. In many cases, however, governments exploit the taxes for political reasons, spending them on projects unrelated to roads and other transportation improvements. 

Gasoline Fuel Tax Rates as of January 2016
The American Road & Transportation Builders Association provides a map documenting state gasoline tax rates, using data from state Departments of Revenue. 

State Motor Fuel Taxes: January 2016
The American Petroleum Institute documents each state’s current motor-fuel taxes (both gasoline and diesel). 

Reconsider the Gas Tax: Paying for What You Get 
Jeffrey Brown of the University of California–Los Angeles notes the gasoline tax was created as a user fee to raise money for roads, but many politicians and the general public seem to have lost sight of this purpose and lump it together with other unpopular taxes. The challenge for policymakers, Brown argues, is to restore the connection in the public’s mind between the tax and the roads it should provide.

Research & Commentary: Congestion Traffic Pricing 
Congestion pricing, an alternative to gasoline taxes, uses market principles to address traffic congestion. Under congestion pricing, operators of a road charge a variable price based on congestion, allowing the operator to manage demand and limit congestion. Heartland Senior Policy Analyst Matthew Glans examines several proposals for implementing pricing systems to alleviate traffic congestion. 

Fuel Taxes, Tolls Pay for Only One-Third of Road Spending 
Joseph Henchman of the Tax Foundation finds highway user taxes and fees made up just 32 percent of state and local spending on roads. Financing for the rest of the projects came out of general revenues, including federal aid.

Raising Gas Taxes Won’t Fix Our Bridges
In the aftermath of the I-35 bridge collapse in Minneapolis, Minnesota, Adrian Moore of the Reason Foundation argues increasing fuel taxes should not be the only response to state transportation funding problems. Moore wrote, “First we must examine how we spend transportation dollars now. Then we maximize the value out of those dollars. Finally, the last step is to address the need for additional revenue.”


Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other topics, visit the Environment & Climate News website at, The Heartland Institute’s website at, and PolicyBot, Heartland’s free online research database, at

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