To Raise or Not to Raise Gas Taxes?

States weigh tax increase against low gas prices, high budget shortfalls

OAKBROOK TERRACE, Ill. -- With gasoline and diesel prices relatively low, states have been grappling with whether now is the time to raise fuel excise taxes to prop up their budgets and fund infrastructure repairs. Here is the latest from three states debating the politically risky move. punpung gas nozzle

Mississippi: The chairperson of the state Senate Transportation Committee has decided not to bring up for a vote his proposed 8% tax on gasoline and diesel sales to fund infrastructure repairs, said a report by the NortheastMississippiJournal. State Sen. Willie Simmons (D) had suggested levying the motor-fuel tax—which would have shaken out at about 12 CPG—to raise about $335 million annually for state roads and bridges.

The state’s 18.4-CPG fuel tax has not generated any more money than it did when first implemented in 1987, the newspaper said. The Mississippi Economic Council, a nonprofit that advocates for businesses in the state, had recommended spending an extra $375 million annually on infrastructure. Simmons’ proposal would have imposed the fuel tax and increased vehicle user fees to raise the money. But it became clear after meeting this week that committee members were not ready to support a tax.

“It is very difficult when you start talking about raising fees or increasing taxes,” Simmons said. “Members recognize we have to do something.”

Sen. Hob Bryan (D), also a proponent of infrastructure spending, questioned why the Senate should raise a tax after it recently voted to cut taxes that fund other state agencies by 10%. Bryan is planning an amendment that would trim the current 18.4-CPG motor-fuel tax by 10% “to give a pay raise to every driver in the state.”

New Mexico: State Sen. John Arthur Smith (D), chair of the Senate Finance Committee, is pushing to raise the state gas tax to help fund infrastructure repairs and maintenance, according to KRWG. The 18.88-CPG gasoline tax has not been raised since 1993, and it gives New Mexico the seventh-lowest gas-tax rate in the country, despite being the fifth-largest state by area. And its buying power has declined.

"A dollar of gasoline tax in 1995 bought $1 of road. Today, it buys 56 cents,” Smith said.

This February, he introduced a bill to implement a 5-CPG increase in the state gasoline and special-fuels excise taxes. But Gov. Susana Martinez (R) has rejected the idea, having taken a “no-tax-increase” pledge when she was elected in 2011, despite the state facing a big budget shortfall.

Tennessee: Legislators are debating whether to raise the state’s 18.4-CPG gasoline tax and 21.4-CPG diesel tax, which haven’t increased since 1989, reported the DailyNewsJournal. State Sen. Jim Tracy (R), chair of the Senate Transportation Committee and an advocate for raising the tax, said officials at the Tennessee Department of Transportation are evaluating the condition of state roads and how to update transportation funding. The state faces a $6 billion funding backlog for transportation projects.

The average motorist drives 15,000 miles annually, Tracy said, while paying $160 in gasoline taxes.

"I pay more than that for my cell (phone)," he said.

Gov. Bill Haslam (R), also a proponent of raising the state gas tax, recently suggested that cities and counties be able to levy their own fuel taxes to fund infrastructure.


More from our partners