Gas Taxes

The upcoming Memorial Day weekend marks the start of the traditional summer driving season. In most states, summer road-trippers are paying more gas tax than they did a few years ago and are benefiting from smoother and safer roads as a result. In total, 30 states have raised or reformed their gas taxes in the last six years.

Because of these reforms, more than 193 million people (or 59 percent of the U.S. population) now live in places where the state gas tax rate automatically varies over time.

Twenty-six states and the District of Columbia tax these two fuel types at the same rate or very similar rates, as of April 2019, according to data from the American Petroleum Institute.

The tax rates identified in this map include state and local excise and sales taxes on diesel fuel, as well as various fees, as calculated by the American Petroleum Institute (API). These taxes are levied in addition to the federal government’s 24.4-cent-per-gallon diesel tax.

This article examines the good aspects of Rep. Shuster’s infrastructure funding plan (a higher gas tax that is indexed to inflation), the bad (a flawed indexing formula and eventual gas tax repeal), and the downright ugly (tying the hands of a funding commission before their work even begins and refusing to ask more of high-income households).

A rare sight is coming to Oklahoma. The last time the Sooner State raised its gas tax rate, the Berlin Wall was still standing, and Congress was debating whether to ban smoking on flights shorter than two hours. Fast forward 31 years, and Oklahoma is finally at it again. On Sunday, the state’s gas tax rate will rise by 3 cents and its diesel tax rate by 6 cents. Both taxes will now stand at 19 cents per gallon—still among the lowest in the country. But Oklahoma isn’t the only state where gas taxes will soon rise.

As part of his budget plan released Monday, President Trump offered an infrastructure proposal that he describes as a $1.5 trillion 10-year surge in infrastructure investments. The details of the proposal explain that the federal government would put up only $200 billion of this total, which the administration claims will be offset with cuts in other spending. Even this relatively meager funding amount is illusory because it would clearly be financed by cutting other federal spending — including infrastructure investments.

Summer gas prices are at their lowest level in twelve years, which makes right now a sensible time to ask drivers to pay a little more toward improving the transportation infrastructure they use every day. Seven states will be doing this on Saturday, July 1 when they raise their gasoline tax rates. At the same time, two states will be implementing small gas tax rate cuts.

Many state governments are struggling to repair and expand their transportation infrastructure because they are attempting to cover the rising cost of asphalt, machinery, and other construction materials with fixed-rate gasoline taxes that are rarely increased.

The flawed design of federal and state gasoline taxes has made it exceedingly difficult to raise adequate funds to maintain the nation’s transportation infrastructure. Thirty states and the federal government levy fixed-rate gas taxes where the tax rate does not change even when the cost of infrastructure materials rises or when drivers transition toward more fuel-efficient vehicles and pay less in gas tax. The federal government’s 18.4 cent gas tax, for example, has not increased in over twenty-three years. Likewise, nineteen states have waited a decade or more since last raising their own gas tax rates.