If Our Gas Taxes Go Up, Will Gas Prices Become Unfair?

Faced with dwindling cash reserves, several states are considering raising their Gas Tax. Those with efficient vehicles will come out ahead. Low income families, the trucking industry and the alternative fuel industry will finish last.

Now I am all for taxes - there are many essential services that the government performs and they need money to do this. Most often, gas tax goes directly into maintaining and repairing roads and highways - a costly endeavor - but absolutely essential to keep our country alive.

What I’m specifically concerned about is how this will affect three groups: those with low incomes, the trucking industry, and the alternative fuel industry.

• » See also: Up Close And Personal With Coskata’s New Flex Ethanol Plant
• » Get Gas 2.0 by RSS or sign up by email.

Low Income Families

Those with low incomes often rely on their cars very heavily - to get to work, shopping for the family, etc. The bottom line is never far outside of their minds and making the baseline cost of fuel go up even more sounds like a dangerous idea. Public transportation would be a possible alternative, but it is not always available, convenient or even less expensive than owning a car.

Trucking Industry

The trucking industry is absolutely essential to the American economy - with the amount of sprawl that we have, and the under-developed rail infrastructure, the responsibility for getting goods to where they need to go falls on the truckers. Times have been tough lately for truckers; they are very high users of fuel and fuel costs have been going all over the place for the past year. I know I’ve noticed “fuel surcharge” on many invoices - evidence of the bind the trucking industry is in.

Alternative Fuel Industry

Alternative fuels will also be hard hit with raised taxes, as they get taxed just like petroleum. Although some states have limited tax credits available for alternative fuels, alternative fuels are generally more expensive than petroleum fuels. Any increase in their price will make them less appealing to the public and therefore money going towards research and development will be scarcer as well.

Taxes Broken Down

There are three different sorts of tax that are commonly found on gas and diesel: Local, State and Federal tax. Federal Gas Tax is always $0.184 for gas and $0.244 per gallon for diesel. State Gas Tax and Local Gas Tax varies from from location to location. For example, in Eugene, Oregon, every gallon of diesel has the following taxes placed on it:

$0.244 Federal + $0.24 State + $0.05 City = $0.534 per gallon.

California, New Hampshire, Oregon, Massachusetts, Illinois, Iowa, Ohio are all considering raising their fuel taxes. Here is a current state by state breakdown of combined State and Federal Gas Tax. Please note that it is an average of fuel tax across the state and does not reflect proposed increases.

Chart source.

Photo Credit: Sonny Side Up! on Flickr under Creative Commons license.

Tweet This Post