Outline of highway plan: Betting on prosperity | Arkansas Blog

Friday, October 23, 2015

Outline of highway plan: Betting on prosperity

Posted By on Fri, Oct 23, 2015 at 6:44 AM

The Arkansas News Bureau reports on a draft plan of ideas to raise highway construction money. One of the main ideas includes a tax increase, but it would be phased out with transfer of existing revenue that currently goes elsewhere.

In short, unless state revenues rise significantly overall, this highway plan depends on depriving other services of money.

Included in the draft report is a 12-part proposal that would raise the motor fuel tax on gasoline and diesel by 10 cents per gallon. The report estimates the tax increase would net about $125 million per year for the Arkansas Highway and Transportation Department and $31 million per year for cities and counties.

Along with the tax increase, the proposal calls for phasing in a transfer of revenue from the sales tax on new and used vehicles from general revenue to the highway fund over five to nine years. As the revenue transfer is phased in, the tax increase could be phased out — and personal and corporate income taxes could be reduced as well, the draft report states.

Got that? You can reduce income taxes if you spend more money on highways. Not in a world of old-fashioned arithmetic you couldn't. Not unless you think revenues are going to grow so dramatically from future prosperity that there will be tax cuts aplenty to go around.

That's not all. The plan also proposes to take a portion of a half-cent sales tax devoted primarily to highways away from a general revenue recipient.

The proposal also calls for transferring to the highway fund the $4 million from the diesel tax that currently goes to general revenue each year; providing tax refunds for highway-related materials purchased by AHTD and its contractors; increasing registration fees for alternatively fueled vehicles; and increasing vehicle registration fees to put them on a par with fees charged in surrounding states. 

There are other proposals.

* There's a "revenue neutral" plan that's all about taking money from other places.

* There's a straightforward fuel tax increase proposal.

* There's a simple, straightforward and productive idea to end the sales tax exemption on fuel sales. This makes too much sense to get much attention.

* There's a diesel fuel increase, which again makes too much sense to be approved because it would get some money back from the truckers who do most of expensive damage to interstates.

More spending takes more revenue, period. You can raise taxes or you can beggar other services and hope the unicorn of massive prosperity comes loping over the horizon.

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