New tax is the plan for highway money; here's the impact on drivers | Arkansas Blog

Wednesday, March 1, 2017

New tax is the plan for highway money; here's the impact on drivers

Posted By on Wed, Mar 1, 2017 at 7:24 AM

FILL ER UP: At today's prices a new fuel tax proposal would cost drivers about 10 cents a gallon, a tab higher for truckers on account of volume than passenger car drivers
  • FILL ER UP: At today's prices a new fuel tax proposal would cost drivers about 10 cents a gallon, a tab higher for truckers on account of volume than passenger car drivers
The highway lobby has opted, somewhat to my surprise, for a straightforward new tax  on users to pay for road construction, if voters approve.

It's simple, practical and fair (at least on the revenue side; the spending of the money in the future by the state highway agency is an unknown.)

The legislation filed Tuesday would 1) put the state's 6.5 percent sales tax on the wholesale price of gas and diesel and 2) give the highway agency the power to issue bonds supported by fuel taxes to pay for road construction. (By my quick read, fuels used off-road, think farm use, would be exempt.) The bond issue bill would have to be approved by voters for the tax to take effect.

No more stealing of general revenue for highways. No extension of the special state sales tax on everything from blue jeans to guitars to pay for highways.

Great quote from Rep. Dan Douglas, the  Bentonville Republican sponsor, in the Democrat-Gazette coverage:
"It's a revenue increase. I'm sure some will say it's a tax increase."
Yes. Some will say that. And they will be correct. No comment yet from the Koch lobby, though taxes approved by voters, as this must be, enjoy a bit more favor than legislative tax increases. I've also asked the truck lobby about the bill.


Missing from coverage today was an idea of what this tax increase means to motorists. Though the tax will be assessed on a rolling average, you can get a pretty clear idea from the current wholesale price index used in the legislation.

According to U.S. Energy figures, the wholesale price of gasoline today in the Gulf Coast market is $1.57 per gallon and the price of diesel is is $1.60.

For simplicity's sake, let's just say that rounds off to about 10 cents a gallon in new taxes if you apply the state sales tax to that wholesale price. Filling up my inefficient 14-year-old SUV would cost an additional $1.50 on a typical 15-gallon fillup. The tab will expand or contract with gas prices, another plus.

If the state must raise more money for roads, raising it from users in a way that will encourage more efficient cars and driving patterns is a pretty good way to do it. If we could get some more wisdom in spending of those dollars (enough with the city-ruining 30 Crossing Concrete Gulch) that would be a fine thing, too.

This new tax would be on top of existing state and federal excise taxes on fuel — 21.5 cents per gallon for gas and 22.5 cents for diesel at the state level and 18.4 cents for gas and 24.4 cents for diesel at the federal level. Add a dime and a car driver will be paying about 50 cents a gallon in taxes on gas altogether.

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