GA Legislature: Correlating the Gas Tax with Road Costs
Decatur Metro | March 2, 2011From the AJC’s low-hanging fruit “ACK! MORE TAXES?” article this morning…
As gasoline prices climb rapidly past $3.30 a gallon, the Legislature is considering a change in the state’s gas taxes that could well push the price even higher.
The change, part of a sweeping proposal to overhaul the state’s taxation system, would address a huge problem in Georgia transportation funding: Much of the state’s gas tax does not rise with inflation. Under the bill introduced last week, that would change.
The complex proposal does have a possible upside for drivers’ pocketbooks, sort of. If the price of gas went really high, although the total revamped gas tax may still go up, it could go up less than if legislators make no change.
According to the article, currently the gas tax is 50% a flat 7.5 cents/gallon and 50% a “per-gallon charge that changes according to the price of gas”. The proposed tax currently before the legislature would line up both portions of the tax with the annual cost of road construction. As of 2011, that would equate to a 6 cent increase in the tax.
Arguments against include…
“I really don’t want to pay more than what I’m paying now,” especially considering the rising price of gas, said Marc Cain, 36, of Conyers. “It comes off as 5 cents but that adds up over everyday travel.”
Ahh…OK. Well, then sir, can you choose which roads and/or bridges we’ll be shutting down or neglecting in the coming year? Yeah. But seriously, this sounds like a pretty decent proposal, if it operates as intended. Tie the cost of roads to the tax annually. If people want to push the tax down, they’ll be faced with the immediate result of less road maintenance.
Nothing’s ever as easy in politics as it first appears, but I’m having trouble finding reasons not to really like this idea (which usually means it doesn’t have a snowball’s chance of being passed).
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The “50% a “per-gallon charge that changes according to the price of gas” is in reality a 4% sales tax, 3% of which goes directly to GDOT and 1% to the state general fund like other sales taxes.
If you buy a refrigerator, does the manufacturer get the sales tax? I think not, but GDOT gets the sales tax on a gallon of gasoline. So, GDOT is double-dipping anyway.
If you follow the reasoning that it is a transportation tax, then why not give the other 1% to alternative transportation like rail and transit?
BTW, it should be noted again that Georgia has the lowest motor fuel tax (7.5 cents per gallon, the other “50%”) of any state. That sure doesn’t help us have the lowest gas prices, though.
I am very in favor of this. As noted by Steve, GA has the lowest fuel tax in the country. If it had been marked to inflation it would be much higher now and our transportation depts wouldn’t have such massive budget issues AND we’d have better transit.
Plus, for you fair tax folks, this is a consumption tax so it OUGHT to align perfectly with your views too!! The more you drive the more you pay, perfect.
I drive very little so this is no big deal to me personally. But without some strict control over spending, I would never favor any tax indexed to government spending. The last thing these clowns in state government need is more of an excuse to waste money, and the knowledge that more spending will equal more taxes strikes me as the worst possible incentive.
Yeah, but isn’t part of the problem that there’s currently no correlation between money spent and taxes paid? In theory, if they raise the tax to pay for outrageous amounts of spending people will freak-out and they’ll be pressured to dial back. Under the current structure, the two aren’t tied to each other at all and as a result, GDOT is over-committed by millions (billions?) of dollars.
“In theory” — perhaps. But in theory we have good, responsive, competent people running major government agencies, and programs that outlive their usefulness are cut. In reality, not so much.
Better result — hike the tax on some sort of constant basis (I don’t know, another 15 cents per gallon or something). Reduce spending to match that revenue stream. But “spend all you want and the taxes go up automatically” is a recipe for even worse government. Assuming that’s even possible.
In practice, the gas tax is referred to as an “invisible” tax which people “just pay” (i.e. low citizen awareness). Your theory is better applied to tolls (but still wouldn’t prevent politics from creating a tidal wave of deferred maintenance – the flip-side of DEM’s concern).
‘Tis a good point, and I thought of it briefly when writing my response to DEM. Depending on how the a new year’s tax was applied, any huge increase would be noticed immediately by voters on Day 1. But if it was gradually increased, I can certainly see how it would be “invisible”.
I’m getting the potential issues with such a set-up, but I like the idea of the tax being enough to cover all the costs roads ACTUALLY require in a given year. I think the current “invisible tax” element, causes folks to believe that roads just take care of themselves, while transit is a huge drain on resources.
Perhaps we could work to make the public more aware of the tax by requiring that it be posted at all gas stations?
` Perhaps we could work to make the public more aware of the tax by requiring that it be posted at all gas stations?
While it may sound cynical, I think that doing that could make it worse. If the gas tax (generically) did actually cover costs, then there’s no problem to begin with. Here, we’re talking about the state portion, which is just a piece of the funding – the Fed portion doesn’t cover its contribution – (and says nothing of indirect costs or externalized costs).
It’s a regressive tax that will hit working class people much, much more than anyone else.
And if you think that GDOT is going to devote any of it to anything other than roads, you have not been paying attention to the history of the great state of Georgia.
I’m not a supporter of this plan, but why do you say this? It is a consumption tax, meaning you can choose to consume less. Take MARTA, ride your bike, get a Honda as opposed to a pickup, drive less other than going to/from work. This is more than possible — when oil hit $145 a few years ago people changed their behavior quite rapidly, and demand cycled down.
DEM,
Any tax on basic necessities hits the working class/working poor disproportionately. It proportionately takes more of their income compare to people who have higher incomes or inherited more money/assets. You are correct that to a degree people can change behavior, but only to a degree. Your suggesting to just “get a Honda” is not workable. If you’re poor, the vehicle you have is the vehicle you have. If you’re poor and the job market it tight, you may not have the “luxury” of having a job near MARTA, or having a home near MARTA, or having a job close enough to home to bike or walk.
It’s the common problem to most consumption taxes. They only make sense for society as a whole when the items being taxed aren’t necessities. It’s why Georgia avoided a food tax for so long.
“Georgia avoided a food tax for so long”
There used to be one. It wasn’t avoided, it was removed 15 or so years ago.
Thanks for the correction, but the point still stands about the regressive nature of most consumption taxes.
The closest we ever lived to a MARTA station was when we first moved here and our annual income was well below the poverty line.
Not sure I get your point in relation to the thread.
Oh wait – possibly you’re thinking that I meant it’s expensive to live near a MARTA station? Sorry if I wasn’t clear. No, what I meant was that in a tight market, people often have to take jobs that require traveling some distance to get to them. If job and the home BOTH aren’t near MARTA, then they have to drive. They could move, but there’re expenses on many levels associated with that.
True, true. Thanks for clarifying.
Paying for road infrastructure & maintenance with a gasoline tax may become problematic in the future as alternately fueled vehicles gain popularity. I would propose a tax based on weight and miles traveled as the basis for a “use” tax as this would more accurately reflect the wear and tear each vehicle is causing to our roadways. The information is already collected during the yearly inspection so there is no added cost to implement.
This is an excellent idea, and close but not a perfect solution because of the use of out-of-state vehicles and non-motor vehicles on public roads. If there was an additional estimation collected for that amount, we’d have it covered.
And weighing stations could catch a portion of interstate use as well.
As I understand it. interstate frieght is covered as they pay based on logged miles in state per axle weight. Agricultural, Aviation, Nautical and other exempt vehicles won’t need to buy special “tax free” fuel.
IMO The reason this won’t work is rather cynical and is why they want to move away from the per-gallon model to a price-based model. The per-gallon model somewhat reflects road usage and the price-indexed model is just grabbing money because they need more of it for the general fund.
“The information is already collected during the yearly inspection”
What inspection?
I do agree with that idea, especially if weight carried more weight (ahem) in the formula than mileage. In my view, a Suburban (for example) should trigger a much bigger tax bill than a Porsche. In other words, either scrap the ad valorem tax or add a usage component to it.
emissions inspection
Duh. Guess I should have known that.
I want my electric car!
As the will to raise taxes on gas rarely comes around, perhaps we should limit road building to available funds and instead apply our willingness toward a hike from the Feds (and by hike, I mean adding an energy security tax in addition to adjusting the trust fund tax).
I suggest this because I’m inclined to assign a higher priority on having the price of gasoline better reflect its true cost (and a lower priority on having the price better reflect the cost of funding roads).
I also much favor this approach