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The Gas Tax is NOT a Tax

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Ideological opposition to tax increases is standing in the way of getting transportation in this state on a sound financial basis. Several commenters to my recent post, “Delisi Appears to Rule Out Gasoline Tax Increase,” dismiss the likelihood of an increase in the gasoline tax. What people are missing is that “tax” is a misnomer in the case of gasoline. It is a pure user fee. You pay for the mileage that you drive–nothing more, nothing less. If your car gets around 20 miles to the gallon, you are paying roughly 2 cents a mile to drive. Property taxes and income taxes are altogether different. In those cases, the government taxes value (in the case of property) and productivity (in the case of income). They pick your pocket and redistribute the property tax dollars to local government functions (schools, water and wastewater, streets, and the like) and the income tax dollars to Medicare, Medicaid, and social security recipients. Most taxpayers who do not quality for these entitlement programs will not see any benefit. Gasoline taxes are used to maintain and improve the roads that you drive on. The tax dollars stay in transportation–or they would, were it not for diversions into public schools and the Department of Public Safety and pork barrel projects. Those who oppose raising taxes are fond of pointing out that as fuel efficiency improves, gasoline “tax” revenue declines, because cars can go farther on a tank of gasoline than they used to. This is true. But other factors make up for this lost revenue. Texas’s population is growing rapidly, and more people means more cars and more cars means more gasoline sales, and more gasoline sales means more revenue. There is plenty of life left in the gasoline user fee. The overriding political question is, How are we going to pay for roads? No one disputes that Texas needs a better road system and revenue to pay for it. At least five alternatives exist: (1) put more general revenue into highways; (2) issue bonds to borrow the money to build roads; (3) impose tolls; (4) sell concessions and privatize roads; (5) raise the gasoline tax and index it to inflation. Of these, (5) raising the gasoline tax, is the most logical and the least intrusive. Is it a “tax” increase? Only if you redefine a user fee as a tax. If a gasoline “tax” is a tax increase, then so are (3) tolls. They are the same thing: a payment you must make in order to use the roads. Any solution that relies on requires general revenue is a bad idea, because it puts highways in competition with schools, health care, and law enforcement. Issuing bonds is no panacea, because the bondholders have to be paid, and what else are you going to pay them with other than general revenue? TxDOT’s favored source of revenue has been concession payments. There may be situations in which concession payments are appropriate, but not in a case where control of the roads is surrendered to foreign corporations, far into the future, so that what we are really doing is shifting the tax burden to our children and grandchildren. Finally, we ought to question whether TxDOT should demand concession payments from local toll authorities in Houston the Metroplex, rather than having the revenue remain in a region subject to local control. The place to start is by acknowledging that the gasoline tax is really a user fee. Then, maybe, we can actually have a discussion about how to solve our transportation problems without getting caught up in political sloganeering and ideology.

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