1.5 Cents per Gallon
By: Lowell
Published On: 1/11/2008 7:02:45 AM
To replace the revenue lost from dropping the abuser fees, Virginia Democratic legislators are proposing a 1.5-cent-per-gallon increase in the gasoline tax. Let's put this in a bit of perspective.
First, Virginia's gas tax (including excise tax) is currently 17.5 cents per gallon, compared to 29.7 cents per gallon in North Carolina and 23.5 cents per gallon in Maryland. In fact, Virginia has one of the lowest gas tax rates in the country. Increasing Virginia's gas tax by 1.5 cents per gallon will leave Virginia well below Maryland's or North Carolina's gas tax rates and among the lowest in the country.
Second, Virginians consume about 527 gallons per person per year of gasoline. The 1.5-cent-per-gallon tax increase will cost each of us about 15 cents per week ($7.90 per year).
Third, according to AAA, the average cost of owning and operating a motor vehicle is about $10,280 per year. That's about $850 per month, $200 per week. A 1.5-cent-per-gallon gas tax increase will raise that cost of owning and operating a motor vehicle from $10,280 per year to $10,288 per year. That's a 0.07% increase.
Finally, just to put this in a really broad perspective, the International Center for Technology Assessment estimated back in 1998 that the "Real Price Of Gasoline" -- including subsidies to the oil industry, "military expenditures for protecting the Middle East and other oil rich regions; and environmental, health and social costs including those for global warming" -- was as high as $15.14 per gallon. Currently, we're around $3 per gallon, far less than that $15.14 per gallon figure, and also far less than the $6-$8 per gallon people pay in Europe.
The bottom line is that 1.5 cents per gallon is pretty much nothing, especially considering the huge environmental and national security price we pay for our "oil addiction" (as President Bush calls it). Ditching the hated abuser fees for this miniscule 1.5 cent-per-gallon tax is a great idea. Of course, that means the flat-earth House Republicans will oppose it. What else is new?
Comments
Republican Logic at work (oldsoldier - 1/11/2008 8:30:46 AM)
What confuses me is why this tax, which is non-progressive is bad, but the non-progressive so-called "fair tax" is good. Aren't both simply sales taxes?
Incorporating externalities (Lowell - 1/11/2008 8:41:05 AM)
such as environmental, military, and health costs resulting from oil consumption is highly progressive. Again, the gas tax respresents a miniscule percentage of the overall cost of owning and operating a motor vehicle. Plus, Virginia's gas tax is among the lowest in the nation. If you have a better way of paying for transportation improvements, let us know.
PS We should also cut all subsidies for Big Oil immediately, take that money and pour it into energy efficiency and renewable energy development.
OOPs. I sacrificed clarity for brevity (oldsoldier - 1/11/2008 9:05:45 AM)
I think the "fair tax" loved by republicans is unfair, while I believe that roads should be paid for by the users and the fairest way to do this is the tax on gasoline. Fair because the-out-of state traffic will pay it too. Maybe an increase would be palatable to the republicans if we renamed it a "user fee".
I don't even want to go into the oil company thing. Maybe someday what was planned at Cheney's meetings will be uncovered
The "fair tax" is anything but fair. (Lowell - 1/11/2008 9:23:06 AM)
It will absolutely SLAM the middle class in this country, while providing an enormous tax CUT to the wealthiest Americans. It's extremely regressive and basically bonkers. That's Mike Huckabee's great idea, though, along with preventing Pakistanis from sneaking across the Rio Grande with dirty bombs. Whatever.
Gas tax is regressive (legacyofmarshall - 1/11/2008 10:22:57 AM)
But it is also a "user fee." If all the money goes to transportation, only the users of roads are paying for this. Also, it's an easy way to tax out-of-staters, always a popular idea.
Quite apart from whether this is good policy is (aznew - 1/11/2008 10:35:47 AM)
the question of how this plays out politically. Unfortunately, it plays into the comfortable and common narrative of Democrats as tax increasers. This meme gains currency because the GOP doesn't say taxes will be increased $7.90 per year for each of us, but "The Democrats pushed through a $X million dollar tax increase."
It's not so much a lie as a framing issue.
Alan
It boogles the mind (Eric - 1/11/2008 10:37:27 AM)
to think that this is even an issue.
1.5 cents is nothing by itself and as Lowell points out it's an absurdly low percentage of the total cost of vehicle ownership.
For the government to even spend time debating this is a complete waste of time and (you guessed it) our tax dollars. Just pass it and move on to issues that are worthy of discussion. For the Republicans to drag this out and block it - sheer stupidity.
Agreed, this shouldn't even be a question (Lowell - 1/11/2008 12:49:57 PM)
Really, we should be talking about a steep carbon tax, revenue neutral, to deal with our oil addiction and global warming. But that would be in a rational world.
Oldsoldier does not know much (comonsense - 1/11/2008 10:39:43 AM)
First, the Republicans like the Fairtax because it is the only tax that anyone will pay. So, there would only be a sales tax and thats it. Now, the raise in the gas tax in VA is bad because first, the only way Lowell could rationalize this was after he compared it to every state around us, second, because Virginia Legislators have not looked at the budget yet to see what could be cut before discussing raising taxes. Trust me, there is something that could be cut! Just because other states do something doesn't mean that Virginia needs to do it as well. Thats bad logic to sell this TAX.
I don't think... (Tom Joad (Kevin) - 1/11/2008 10:59:16 AM)
Lowell rationalized an increase in the gas tax solely based on other states doing it. He rationalized that it would be a cheap, easy fix to the abuser tax.
I agree that there could be some cuts made but we should also look at minimum tax increases to supplement the budget.
The easy fix... (comonsense - 1/11/2008 11:06:31 AM)
The easy fix(raising gas tax) is not always the best fix. There is a lot of programs that could be cut or have decreased funding. That would be a true solution that takes hard work. Our legislators should not always look for the easy way out.
I'm not saying... (Tom Joad (Kevin) - 1/11/2008 11:11:45 AM)
don't cut some spending. It's what anyone with a budget would do. But if you are going to put some big time money into a new initiative you have to find the funding somewhere. Raising this tax by 1.5 cents are small drops in the bucket that could add up to solve our funding problems from transportation.
Taxes should fit the use (TurnPWBlue - 1/11/2008 12:11:05 PM)
For me, raising the gas tax makes sense on a couple of levels, but also has some pitfalls.
On the positive side, raising the gas tax puts the tax burden close to where the state expense lies. Gas, by and large, is bought to fuel automobiles and other vehicles. The money is needed for road and transportation improvements. In general, the more miles driven on the road, the more gas used. Thus, what you pay in gas tax becomes your "user fee" for being on the road. Second, raising the gas tax only adds to our economic incentive to have more efficient and alternative fuel vehicles on the roads.
On the down side, I would want to see any revenue raised through a gas tax hike specifically earmarked and designated for transportation funding. I don't want to see the gas tax being used for other programs and purposes. Any surplus (ha!) in a given year, should be put into a transportation trust fund for future projects. The other issue I have with gas taxes in general is that they are regressive. Those who end up paying the most under this plan will actually be those who can afford it the least. I can buy an efficient new car but woe to those who are stuck with a 10 year-old clunker because that's all they can afford.
Thanks Commonsense (oldsoldier - 1/11/2008 12:13:23 PM)
I thought your first comment was a "tongue-in-cheek" play on words and political philosophies. Then your later comments took the fun out of it as you seem to be a true believer that the solution to our land communications networks operation, maintenance, and development IS NOT to pass laws mandating that the gas tax can be used only for transportation and raising it 1.5 cents.
I can see why you think this won't work. The 1994 republican sweep of Congress promised a social security "lock-box" that never happened from 1994 to date, SO
I apologize to you. How stupid of me to think the republican controlled Virginia Legislature could produce a Virginia transportation lock-box when the concept is promissable but unworthy of implementation. Also, I guess I forgot that a sales tax is the only tax all people pay. Again, I apologize and by way of excuse can only say that the man who said: "There is such a thing as too much education" was right on point in my case. Sorry
People Need To Realize... (RedVirginia - 1/11/2008 12:29:51 PM)
None of the parties in the General Assembly are going to propose the perfect fix to the problem. The only way to truly fix this is to be honest about the problem. When you are going to have to raise taxes to fix something, every cent of that tax raise MUST go to the problem you are addressing. As well, if you collect to much money from the people return it to them. What happened when the state kept all of OUR money after the giant surplus in the Warner years? They are out of money again. Had the State Democrats and Republicans acted like true fiscal conservatives we would not be talking about Gas Taxes or Abusive Driver Fees.
Fund Accounting and fiscal matters (tx2vadem - 1/11/2008 10:31:09 PM)
The legislature already has established funds and devotes portions of tax revenue to those funds. Besides the Literacy Fund though, these aren't set in stone and the legislature can change them as they see fit. And in some cases you would want the General Assembly to do just that especially if the need in one area outweighed the need in another and revenue increases were off the table. You need to allow prioritization if you want fiscal conservatism to function well.
On the revenue issue, I respectfully disagree with you. I think the state never planned for the rapid growth of its urban centers. And the urban centers require more revenue to meet the needs of their citizenry. The transportation bill really only did a lot to improve the maintenance situation. But we need to expand both our road & highway infrastructure and our mass transit systems. They capital projects require huge sums of outlays to complete. I think we all enjoy the benefits of our publicly owned transportation infrastructure and would like to keep it in public hands. That requires money and lots of it. And this is transportation alone. Urban areas have an array of service requirements beyond transportation. And it is the quality of those services that creates the fertile ground for businesses to grow and prosper in. Though here in NoVA, it helps a lot that it rains money from Capitol Hill every year by means of the Defense and now Homeland Security Appropriations.