Much Ado About Nothing -- Media Frenzy Over the Gas Tax

It was almost comical to listen to the media falling over themselves to report about possible relief at the gas pump.  But the reality is it's not going to happen.  Why you might ask:

1. The gas tax is a user fee for usage of the roads.  Since our transportation infrastructure has such critical needs, cutting the gas tax will only place our transportation system in an even more dire condition.
2. There was resistance from some legislators and the Gov last session regarding use and amount of General Funds that were being directed to fund highways.  Some contend that only user fees are appropriate for transportation.  Cutting the gas tax, but holding transportation funding harmless would require directing additional general funds to transportation and less user fees.
3. The vast majority of the $100+M budget surplus the Gov announced today is for the Uniform School Fund -- meaning it's targetted for education and can't be spent on transportation.  So a sizeable loss of gas tax revenue cannot be made up with the existing surplus.
4. Utah's state gas tax is $0.245/gallon.  It's fixed.  It doesn't grow as the price of gas increases.  Some states do have a gas tax that's indexed to the price of gas, so a huge spike in price generates significant additional funds, which should be refunded to the taxpayers.  That's not the case here.  I would speculate that with the price of gas, people are driving somewhat more sparingly, so it's likely that we are actually collecting less gas tax as a result of the price spike.
5. Any removal of the gas tax would be followed by restoring the gas tax.  The minor perceived political benefit of removing it for such a short period (30-60 days) wouldn't make up for the huge political cost of restoring it.  A couple of years ago, during the huge budget shortfalls, legislators cut their salaries almost 20%, but no one really notices.  When those voluntary cuts were eventually restored the public outcry was that the legislature was granting itself an excessive pay increase.  (The popular saying is that "No good deed goes unpunished.")
6. 25% of the gas tax goes to local governments for their road funds -- something their likely not ready to surrender anytime soon.
7. Even removing the $0.245/gallon state gas tax and $0.184/gallon federal gas tax still leaves gas priced around $2.50/gallon -- higher than it should be in most people's minds.

I'm all for tax relief  -- let's just address it in a realistic manner.  If we are ready to tighten our belt as a state and cut some programs so we can give the citizens necessary tax relief, sign me up.  From what I hear from constituents, transportation shouldn't be first program to go under the budget ax.  In Utah Co., improving transportation funding tends to be one of the most critical issues.

Comments

[Slam Smith]

I dislike taxes as much as the next guy, but gas taxes are one of the most fair taxes we have. The more one uses the roads the more one pays. I would like to see this formula applied as much as posible to other taxes. The user of the service pays more for it. Though I'm not sure how to apply this to prisoners in the State Prison :-).

I also think that legislators are undercompensated in Utah.

[abel keogh]

While cutting the gas tax may not be the way to go, the state of Utah does have a huge tax surplus. In my opinion that would be best used by given back to the people instead of funneling more money into schools. Politicians in Utah like to talk about cutting taxes but seldom do. It’s no wonder Utah has the ninth highest state and local tax burden in the nation.

[Tyler Farrer]

It seems to me that reacting to high prices by cutting the tax is bad for the economy. If taxes are going to be cut it should be permanent. I don't think that speculation should enter into the realm of government revenue. Besides, I'd hate for us to follow the French (they have just cut the gas tax for this reason) when it comes to tax policy.

[kd]

It is rapid changes and peaks in gas prices that spur people to conservation. The current peaks are creating a tremendous jump interest in alternative fuels, fuel efficient vehicle and it has people seeking ways to realign their lives for fuel consumption.

The attempts of government to regulate the price will end up leading to shortages (like in the 70s).

Thanks for reminding Utah that the taxes are fixed to the gallon and not the price. For that matter, I think Utah would do well to raise the tax on gas and lower the tax on income.