Over the last several years, fuel (diesel and gas) taxes have fallen across the nation. While that may sound like a good thing, it actually might have a negative impact on you – drivers on our nation’s highways.
That’s because the less fuel tax monies that are rolling in to state coffers has a negative impact on road construction and repairs.The Institute of Taxation and Economic Policy (ITEP) this month release its report on fuel taxes, noting these taxes “are the most important source of transportation funding under the control of state lawmakers.”The report states that, unfortunately, most state gas taxes “are built to fail.”
There are more than 35 states that rely on fixed-rate taxes that collect the same amount in tax annually on every gallon of fuel purchased. The rub is that while other costs are rising – such as asphalt, concrete and other transportation construction costs – the fuel taxes are remaining stagnant. In the aggregate, that means inflation is taking a big bite out of fuel taxes.In fact, the report states, “After adjusting to account for growth in construction costs, theaverage state’s gas tax rate has effectively fallen by 20 percent, or 6.8 cents per gallon, since the last time it was increased. In states that rely on the fixed-rate tax, that number increases to 29 percent, which is about 9.5 cents per gallon.
State’s with the biggest declines in percentages of fuel tax monies include Alaska, New Mexico, Montana and Maryland.
According to ITEP, the trend they are seeing reflects long-term changes in how we live. In fact, they said, the decline in the fuel tax revenues means fuel taxes are “a less significant part of families’ household budgets than they have been in 80 years.”