Why is the state of Utah loading the price of gasoline with so many taxes?
If you didn’t know this is coming, you soon will.
The newly passed tax reform law will, for the first time, apply sales taxes to gasoline which, when the law takes full effect later this spring, could add as much as 11 cents to each gallon purchased. And the State Tax Commission, using a formula set forth in state law, announced that the regular gas tax also would go up by 1.1 cents per gallon, to a total of 31.1 cents, in the new year.
If you didn’t know this is coming, you soon will.
The newly passed tax reform law will, for the first time, apply sales taxes to gasoline which, when the law takes full effect later this spring, could add as much as 11 cents to each gallon purchased. And the State Tax Commission, using a formula set forth in state law, announced that the regular gas tax also would go up by 1.1 cents per gallon, to a total of 31.1 cents, in the new year.
Add all of this to the federal gas tax of 18.3 cents, and Utah drivers will be paying roughly 60.4 cents per gallon in taxes alone.
At current prices, this means the actual cost of gasoline, without taxes, is less than $2 a gallon. But you will never know this.
I ask why this is happening because, as time goes on, gasoline-powered cars are becoming more fuel efficient and more people are buying cars fueled by natural gas, electricity or a hybrid combination.
In other words, the state is piling more taxes onto something people are using less of, unless they are poor. Low-income people tend to drive older cars that use a lot of gas.
I thought about this the other day as I sat through an editorial board meeting with representatives of the Kem C. Gardner Policy Institute and a 37-member committee commissioned by state lawmakers to recommend ways to help air quality and deal with climate change.
Their findings included recommendations that the state find ways to become “the market-based EV (electric vehicle) state.” This would involve finding ways to expand the network of charging stations and to use financial incentives to get companies to switch to alternative-fuel vehicles and auto dealerships to begin offering more of them to customers.
In other words, find ways to make the gas tax even less efficient when it comes to funding road repairs.
So why, really, are lawmakers piling on the gas taxes?
The answer likely is simple: They know the world of transportation is changing. It just hasn’t changed that much yet. The Gardner Institute says only about 2% of the 2.6 million registered vehicles in the state are electric, either hybrid or otherwise. That doesn’t even qualify as a dent, yet.
In the meantime, taxing gasoline raises money the state needs to fund highway needs, even if the benefit is temporary, and relieves some of the burden from the general fund. The sales tax on gas could raise up to $275 million a year right now, but Senate President Stuart Adams told the Deseret News it was “probably at best a temporary solution.”
You also might not know the state already is tinkering with alternatives. Owners of electric and hybrid vehicles already pay between $15 and $90 more to register than do owners of gas vehicles. As of New Year’s Day, they can opt into a program that charges them by miles driven, instead. A simple device that plugs into a car’s data port will keep track.
Is this the answer to funding roads in the future? Maybe, but some people might not want a government device tracking their whereabouts. Future drivers might be asked instead to pay a lump sum when they re-register their cars, based on the difference in their odometer readings since the last time they registered.
But that means they might be charged for miles that might have been driven in another state, which didn’t really impact the roads here.
Perhaps the answer lies in a modest mileage fee plus more aggressive variable tolls on major highways, charged automatically through transponders installed at the time of registration. At least then, drivers would have the option of using alternative, non-tolled roads to save money, if they have time.
Admittedly, lawmakers are walking a bit of a tightrope. They want owners of alternative-fuel vehicles to pay their fair share for road costs, but not so much as to ruin the incentive to buy such vehicles in the first place.
That’s understandable. But it’s also true that piling more taxes onto the price of gas makes it difficult to move away from those taxes later, as the percentage of alternative-fueled vehicles increases.
Utahns might feel better if lawmakers set a benchmark — once the market share of electric vehicles reaches 10%, say, gas taxes disappear and everyone moves to a combination of miles-driven taxes and toll roads.
Otherwise, it looks as if lawmakers are just trying to suck blood from a turnip until someone comes up with a better idea. Without a firm benchmark, those ideas may take a while.
At current prices, this means the actual cost of gasoline, without taxes, is less than $2 a gallon. But you will never know this.
I ask why this is happening because, as time goes on, gasoline-powered cars are becoming more fuel efficient and more people are buying cars fueled by natural gas, electricity or a hybrid combination.
In other words, the state is piling more taxes onto something people are using less of, unless they are poor. Low-income people tend to drive older cars that use a lot of gas.
I thought about this the other day as I sat through an editorial board meeting with representatives of the Kem C. Gardner Policy Institute and a 37-member committee commissioned by state lawmakers to recommend ways to help air quality and deal with climate change.
Their findings included recommendations that the state find ways to become “the market-based EV (electric vehicle) state.” This would involve finding ways to expand the network of charging stations and to use financial incentives to get companies to switch to alternative-fuel vehicles and auto dealerships to begin offering more of them to customers.
In other words, find ways to make the gas tax even less efficient when it comes to funding road repairs.
So why, really, are lawmakers piling on the gas taxes?
The answer likely is simple: They know the world of transportation is changing. It just hasn’t changed that much yet. The Gardner Institute says only about 2% of the 2.6 million registered vehicles in the state are electric, either hybrid or otherwise. That doesn’t even qualify as a dent, yet.
In the meantime, taxing gasoline raises money the state needs to fund highway needs, even if the benefit is temporary, and relieves some of the burden from the general fund. The sales tax on gas could raise up to $275 million a year right now, but Senate President Stuart Adams told the Deseret News it was “probably at best a temporary solution.”
You also might not know the state already is tinkering with alternatives. Owners of electric and hybrid vehicles already pay between $15 and $90 more to register than do owners of gas vehicles. As of New Year’s Day, they can opt into a program that charges them by miles driven, instead. A simple device that plugs into a car’s data port will keep track.
Is this the answer to funding roads in the future? Maybe, but some people might not want a government device tracking their whereabouts. Future drivers might be asked instead to pay a lump sum when they re-register their cars, based on the difference in their odometer readings since the last time they registered.
But that means they might be charged for miles that might have been driven in another state, which didn’t really impact the roads here.
Perhaps the answer lies in a modest mileage fee plus more aggressive variable tolls on major highways, charged automatically through transponders installed at the time of registration. At least then, drivers would have the option of using alternative, non-tolled roads to save money, if they have time.
Admittedly, lawmakers are walking a bit of a tightrope. They want owners of alternative-fuel vehicles to pay their fair share for road costs, but not so much as to ruin the incentive to buy such vehicles in the first place.
That’s understandable. But it’s also true that piling more taxes onto the price of gas makes it difficult to move away from those taxes later, as the percentage of alternative-fueled vehicles increases.
Utahns might feel better if lawmakers set a benchmark — once the market share of electric vehicles reaches 10%, say, gas taxes disappear and everyone moves to a combination of miles-driven taxes and toll roads.
Otherwise, it looks as if lawmakers are just trying to suck blood from a turnip until someone comes up with a better idea. Without a firm benchmark, those ideas may take a while.
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