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What Do You Know About Gas Tax?

Information and studies answering the questions does gas tax effectively fund transportation infrastructure and how do gas tax rates impact filling stations near state borders.
These studies compiled by the Heartland Institute think tank provide a look into the effectiveness and future of gas tax.The Federal Gasoline Tax Has Not Been Adjusted in 25 Years, Longer than Ever Before

Q.  Does gas tax effectively fund transportation infrastructure?
 
A.   No, it does not keep up with construction inflation, and the more fuel-efficient cars on the road, the less
gas tax.
 
Read the studies from Governing Magazine and the Institute on Taxation on Economic Policy.
 
Q. How do gas tax rates impact filling stations near state borders?
 
A. The answer in two different studies was stunning. The number of fueling stations on the lower tax side of a border increases by about 30%. Stations within 10 miles of an out-of-state competitor pass through 93% of a tax change to consumers vs. about 136% pass-throughs further from the border.
Two Trends Have Eroded Gas Tax Purchasing Power Over Time
Left Figure: Taken together, these two factors have reduced the purchasing power of the 18.3 cent gasoline tax by 64 percent. To make up lost ground, the rate today would need to increase by nearly 33 cents, to 50.8 cents per gallon. 


To their credit, state lawmakers have escaped the time loop by raising their gas tax rates and, in many cases, reforming their taxes to improve their long-run sustainability. Twenty-seven states have raised or reformed their gas taxes since 2013. 
Purchasing Power of Federal Gas Tax Rate Has Fallen by Two-Thirds Because of Inflation and Fuel-Efficiency Gains


 

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