Wednesday, October 25, 2006

Information about gas taxes

The Brookings Institution released a report called Fueling Transportation Finance: A Primer on the Gas Tax, which is available for free here. The report's authors say, "Although every state levies a gas tax and depends on it as an essential funding source to pay for transportation projects and programs, many citizens and professionals still find the gas tax confusing and contentious. The confusion results in part from differences in the state rules governing the imposition, rate, and administration of the tax. To help dispel this confusion and controversy, this paper undertakes to describe the use of federal and state gas taxes, and assess their impacts on state and local transportation systems and funding. At the end the paper considers various ways to improve the current use and distribution of gas tax revenues to support the development of more balanced, multi-modal transportation networks."

The report finds that Pennsylvania's gas tax in 2002 was lower than it was in 1992, when adjusted for inflation. An adjustment using the inflation calculator at the Bureau of Labor and Statistics shows that this is still the case in 2006, with the current gas tax of 31.4 cents per gallon less than the 1992 inflation-adjusted gas tax of 32 cents per gallon. This comes at a time when there is a dire need for reinvestment in infrastructure, both locally and nationally, and construction costs are rising at rates greater than inflation. Translation - less gas tax money available for more and more work needing to be done. They also say that 30 states restrict their state gas tax receipts for highway funding only. Their recommendations include allowing state fuel tax receipts to be used to develop a healthy statewide transportation system, not just for highways. Another of their recommendations is to exempt municipal car, truck, and bus fleets from the state gas tax, so that the municipalities could have lower operating costs and also provide tax relief to residents. The net impacts of such a proposal should be analyzed to see if it would be a good idea in Pennsylvania.

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