Tags: state | gas | tax | increase

Nationwide Gasoline Taxes on the Rise

Thursday, 04 Apr 2013 12:34 PM

By Lisa Barron

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States across the country have started increasing taxes on gasoline to pay for road repairs and maintenance. While gas taxes have remained relatively constant, there has been a decline in gas consumption and a rise in construction costs, leading to a shortfall in funds.

The price of gas, however, is still high, averaging about $3.60 a gallon nationwide, meaning any tax hikes could hurt consumers.

Yet some 17 states have reportedly enacted or are considering increased taxes and other fees, reports The Wall Street Journal. “It doesn’t matter whether you’re Republican, Democrat, tea party,” Texas state Sen. Robert Nichols, a Republican who chairs the state Senate transportation committee, told the Journal, adding, “Everybody recognizes the need for transportation funding.”

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Republican Gov. Bob McDonnell of Virginia is among those imposing a new sales tax on gas and diesel, which is due to go into effect this summer. Virginia and Wyoming have also increased their gas taxes, while Iowa’s Legislature is considering a hike of 10 cents a gallon.

And Maryland’s state Legislature recently passed Democratic Gov. Martin O’Malley’s plan to boost the current gas tax of 23.5 cents a gallon by between 13 and 20 cents per gallon by 2016, reportedly making it one of the highest in the country.

In its latest report, the American Society of Civil Engineers estimated that inadequate surface transportation, along with especially congested or dilapidated roads, cost the economy $130 billion in 2010. It said the United States needs to invest $1.7 trillion through 2020 but is set to raise just half of that, leaving a gap of more than $800 billion.

Increased fuel efficiency in vehicles is largely to blame for the shortfall as motorists can get much farther on a single tank of gas.

Earlier this year, the U.S. Chamber of Commerce urged Congress to raise gas taxes and tie them to inflation. But not everyone agrees with such a move. Some, like Nichols from Texas, would prefer a constitutional amendment to earmark part of future taxes on car sales.

In Wisconsin, Republican Gov. Scott Walker has rejected a higher tax gas tax and plans instead to issue bonds and sell state property, while Republican Iowa Gov. Terry Branstad wants to link higher gas taxes to a reduction in commercial property taxes.

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