This article was published by The McAlvany Intelligence Advisor on Monday, February 8, 2016:  

For politicians with insatiable appetites for other peoples’ money, the best time to mulct taxpayers is when they aren’t paying attention. Especially when they are already enjoying savings of an estimated $550 a year in lower gasoline costs.

Most drivers have no clue as to what they pay in taxes when they fill up at the pump. Unless they live in California where the combination of state taxes (40.62 cents) plus 18.4 cents federal is almost 60 cents a gallon. Or Hawaii (42.35 cents state plus 18.4 cents federal) where it’s almost 61 cents a gallon. Or New York (42.64 plus 18.4) where it tops 61 cents a gallon.

state takes the cake: 44.5 cents state plus 18.4 federal for a total of nearly 63 cents a gallon.

Elsewhere? Who cares? The average is under 50 cents a gallon state and federal. With gas prices dropping in half since 2014, this is pocket change.

It’s time to pounce. On Thursday the White House announced that President Obama will shortly be requesting that Congress raise taxes on imported oil by $10 a barrel which, when translated into costs at the pump, is a measly 22 cent increase. Nobody will notice that. Besides, it’ll never happen. This being an election year, and Obama running on fumes, and the Republicans owning both houses of Congress, Obama’s announcement will be a waste of perfectly good oxygen.

For the states, however, it’s a different matter. State directors for Americans for Prosperity had a piece in the Wall Street Journal that exposed efforts, even by Republicans, to take advantage of gas prices while they are down.

In South Carolina, for instance, Governor Nikki Haley said in her 2013 State of the State message that

I will not – not now, not ever – support raising the gas tax. The answer to our infrastructure problems is not to tax our people more; it’s to spend their money smarter.

But that was just for show. In January she proposed a gas-tax increase of 10 cents a gallon. She tied it to a 2 percent cut in the top bracket (over ten years), and it was passed by the state House but died in the Senate. Last month she tried again. The bill is pending.

Indiana motorists pay 29.89 cents per gallon in state taxes, which added to the 18.4 cents in federal tax totals nearly 50 cents per gallon. But there’s room for more, according to Republicans in the state House that just passed a gas-tax increase of 4 cents per gallon, which if enacted would push Indiana into the highest third of all states in gas taxes. To add insult to that injury, the House would index the state’s gas taxes to inflation, resulting in perpetual tax increases without having to bother the state’s politicians in the future.

Indiana Governor doesn’t like the idea:

When you have money in the bank and the best credit rating in America, the last place you should look to pay for roads and bridges is the wallets and pocketbooks of hard-working Hoosiers.

But momentum behind the gas bill, which is being coupled with a sin tax of $1 on cigarettes, may be enough to override any veto that Pence might try to wield.

The arguments that the tax-increasers, both federal and state, are rolling out have all been heard before:

  • There’s been no increase in the 18.4 cent federal tax since 1993;
  • And it hasn’t kept up with inflation;
  • And the roads and bridges are in terrible shape, as a result;
  • And there are hundreds of thousands of jobs just waiting to be created, if the pols only had the money.

On the federal level, taxpayers have been forced to bail out the National Highway Trust Fund every year since 2008, to the tune of billions of dollars. The only trouble with that argument is that only 60 percent of that trust fund is spent on fixing the roads! The rest is going to fund the dreams of politicians wanting mass transit schemes, and – ready? – to fix leaky storage tanks!

On the state level, where the responsibility properly lies (as there is nothing in Article I Section 8 of the Constitution that allows the central government to raise taxes to pay for highways and bridges), the usual automatic reaction of grasping politicians is to tax the drivers. Nothing is ever mentioned about other options and alternatives such as user fees, seasonal passes (like ski passes), or enterprise building and maintaining them with tolls collected from those actually using the roads, among other options.

But at the state level the taxpayers are closer to the graspers, and so the chances of them extracting excessive taxes are a little less. And if the wasteful Highway Trust Fund were cancelled altogether, it would also save those federal taxes, while eliminating the need for taxpayers to keep funding it from year to year to keep it solvent.

Drivers would have better roads and bridges, at lower cost, without the federal overhead and interference and cronyism involved with the Department of Transportation and the National Highway Traffic Safety Administration, along with others related to the issue.

Just because gas costs less now than it did a year or so ago is no reason to mulct motorists while they aren’t looking.

—————————

Sources:

Wall Street Journal: Low Gas Prices Have Politicians Pumped to Raise Taxes

: Latest Poll: Vast Majority Oppose Gas Tax Increase  (2014)

Fuel taxes in the US

Highway Trust Fund

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