Bloomberg BNA: Extras on Excise, Running out of Gas

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By Rebecca Helmes, May 28, 2014

New Hampshire drivers will soon pay more per gallon in gas tax, and in return their Interstate 93 widening project will be funded, along with other highway projects. On the heels of several states’ gas tax increases in 2013, the Granite State is the first this year to enact a gas tax increase, via S.B. 367.

It is the New Hampshire’s first gas tax increase since 1991, but that does not mean it was an easy sell. New Hampshire State Sen. Jim Rausch (R) tells Bloomberg BNA in this week’s Weekly State Tax Report that he originally wanted to index New Hampshire’s gas tax to inflation as well, but doing so would have been politically untenable.

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Some organizations, such as the Institute on Taxation and Economic Policy (ITEP), recommend in a May 2014 policy brief that some form of gas tax indexing, whether it is indexed to inflation, indexed to the price of gas, indexed to construction cost inflation, etc., is necessary for gas tax to remain a viable revenue source for transportation funding.  That’s because fixed-rate gas taxes lose buying power over time if they are not increased.  The revenue stream is further eroded as people drive more fuel efficient vehicles and opt to drive less.

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