Bloomberg: Will State Legislatures Pass Gas Tax Hikes This Year?
media mentionHowever, the kind of funding structure that Maryland put in place has been called good policy by organizations like the Institute on Taxation and Economic Policy (ITEP), a non-profit, non-partisan research organization in Washington, D.C., because the inflation adjustment allows the revenue’s buying power to keep up with transportation expenses over time. Flat-rate taxes do not do that when, historically and realistically, legislatures do not vote to increase them each year. So far, the District of Columbia and 18 states levy variable-rate gas taxes.
Still, public perception counts. In November, Massachusetts voters repealed their state’s recently passed gas tax inflation-indexing provision via an initiative. Some opponents of the inflation indexing provision argued that a gas tax indexed to inflation was “taxation without representation.”
Some states, such as Kentucky, Nebraska, New York, Vermont and West Virginia all have provisions in their gas taxes that allow the tax to increase or decrease based on gas prices. These states all decreased their gas taxes effective Jan. 1 based on these provisions and the then-falling price of gas, according to ITEP. Massachusetts’ inflation-indexing provision would not allow the state’s gas tax rate to fall below $0.21 per gallon, keeping motorists from benefiting from the falling prices.