New Year, New Me? Not if you’re Indiana House Speaker Brian Bosma (R-88). For the second year in a row, the Speaker is pushing a hike in the state’s gas tax.
House Republicans unveiled a series of tax hikes last Wednesday in an effort to raise about $800 million in new funds for the state’s transportation infrastructure over the next two years. The plan would not only slap Indiana taxpayers with a 10 cents per gallon gas tax hike but it would also index the tax to inflation, and increase the special fuel and motor carrier surcharge tax.
From the new revenue generated, the state would allocate roughly $300 million in new dollars to state roads in fiscal year 2018 and between $480 million and $540 million the following year. The proposal would also redirect the remaining 4.5 cents of the sales tax on gasoline that is currently diverted to the general fund to the state highway fund, starting in 2019.
The proposal also imposes a new annual $15 fee on every vehicle registered in the state and a $150 per-year fee on electric vehicles. These taxes are projected to generate $92 million per year and would be allocated to local roads.
As detailed above, the proposed solutions to the state’s transportation needs are only focused on raising taxes and not reforming government or reallocating currently collected resources. By allowing the gas tax rate to increase automatically every year, lawmakers are placing tax hikes on autopilot and are stripping from the budget process the responsibility and accountability that come with annual decisions about tax rates.
Second, gas tax revenue will continue to be diverted to the state’s general fund until 2019. If transportation funding were truly a priority, lawmakers would immediately use gas tax revenue for its intended purpose: roads. Legislators would also permanently codify the earmarking of gas tax revenue to new and existing transportation projects.
Third, the gas tax is not a user fee. Consumers must be presented with a choice of either purchasing the service from the government (by paying the fee) or purchasing the services from a private business in order to qualify as a true user fee. Because anyone who purchases gasoline in Indiana is forced to pay the tax, they are not considered user fees. Gas tax increases are tax increases in the same way that income and sales tax increases are. Road tolls, however, are an example of user fees. Tolls are user fees because commuters have the option of using the roads they are imposed upon or not.
Now that hardworking Hoosier families can finally afford to fuel their cars and heat their homes, legislators should not strip them of economic opportunity by making gas increasingly unaffordable. Reasonably and low-priced gasoline allows people to spend more money on groceries and other necessities, including long-term investment savings. Americans for Tax Reform will closely monitor this issue as it develops in the coming weeks and working to educate taxpayers of where their legislator stands on tax hikes and government reform.