The news media provide an endless stream of reports and statistics on how low- and middle-income families are struggling. Then a bit of a break comes along, this time in the form of falling gasoline prices. Sure enough, the same folks decrying the impoverishment of middle-America want to scoop up some of the savings and hand it back to the state and federal governments.
We are told that fuel taxes have not kept up with inflation, that reform – tax increases – are needed as roads and bridges crumble. We are reminded that highway trust funds are depleted as increases in fuel efficiency further choke highway funds.
Before we consider these claims, understand the federal tax on gasoline is 18.6 cents per gallon and the state tax is 25 cents per gallon. So, already 22 percent of the price of the recently-heralded $2.00 per gallon gas price goes to governments.
When we debate an increase in fuel taxes at the state level or the federal level, the same fundamental question should be asked: Do falling gas prices justify a tax increase? We don’t raise sales tax rates because the price of many consumer electronics has fallen. One of the benefits of a market economy is that it spurred innovations, like “fracking,” which led to greater oil and gas supplies and plunging prices. Falling prices help families increase their purchasing power. That’s a good thing. That’s a big deal for hardworking American families struggling to get by. Why should the government take that break away from them? Families spending less on gasoline or diesel means they have more for food, diapers or other essentials.
Another issue we ought to consider is why transportation funding is isolated into highway trust fund buckets in many cases. The state government pulls in revenue from many sources: income taxes, sales taxes, excise taxes, sin taxes – the list seems to never end. Governments should prioritize spending, and Idaho should consider funding priorities based on the needs of the citizens with transportation projects balanced against other needs. That’s how Idaho families operate, and government should too.
Rather than using low gas prices as an opportunity to transfer more wealth to governments, let’s let Idaho families reap the benefit of lower prices at the pump.
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