As Utah lawmakers attempt to better balance Utah’s tax structure, they have considered making transportation funding more “user based” by raising the state fuel tax, or even tolling some highways. That would allow them to reduce general fund sales tax money spent on transportation, freeing up that money for other state purposes. We explore the ramifications.
Despite legislators’ promise that overall taxes will remain level, or even be cut, if the gas tax or other taxes are boosted, citizens remain skeptical. A recent UtahPolicy.com survey showed opposition to a gas tax increase. Is a gas tax boost a viable option for legislators who want to reform Utah’s tax system?
Pignanelli: “If you don’t drink, smoke, or drive a car, you’re a tax evader.” — Thomas S. Foley
One can explain to children how broccoli will make them strong and beautiful, but the inquiry whether they will eat the vegetable always compels emotional negative responses (i.e. “Yuck!”). Similarly, when pollsters explain the need for a gas tax increase to readjust unbalanced revenues and improve roads, most Utahns respond with a snarl.
Every week, almost 2 million Utah drivers are staring at gas pumps, feeling the impact of a gas tax. Legislators know this well. Furthermore, few lawmakers want to spend spring 2020 campaigning for reelection and explaining why they voted to increase the gas tax. A reduction in other taxes will not diminish any outrage.
Policy wonks advocate a gas tax as fair because it is a true user fee. However, long-term aspects are problematic. Cars are becoming increasingly more fuel-efficient, or electrical, and therefore surcharges on fuel will diminish over time. These concerns, combined with the expected political blowback, diminishes any advantages to this revenue source. I enjoy broccoli, especially when accompanied by olive oil and marinara sauce. Too bad such condiments are unavailable to soothe a tax increase.
Webb: Here’s some excellent advice (if I do say so myself): Just do it. The political fallout will be minimal and brief, and no one will suffer retribution in the next election. The result will be a better-balanced tax system, and users will be paying more for roads. It’s good tax policy.
Sure, citizens will tell a pollster they don’t want higher gas taxes. But with prices fluctuating day to day, they will hardly notice it. If lawmakers reduce other taxes to provide an overall tax cut, no one will have a legitimate complaint.
The fuel tax has not been increased very often, but the history is this: No one loses the next election over a gas tax boost. Thanks to better fuel efficiency, hybrid vehicles and the electrification of the transportation industry, actual highway users are paying a smaller and smaller portion of the costs of road construction and maintenance. Users need to pay more.
Eventually, as gas-powered vehicles go away, we’ll need to move to a system that charges by vehicle miles traveled. But, for now, the gas tax remains the best way to pay for good highways.
Poll respondents were even more strongly opposed to toll roads. Why is there such visceral dislike of tolling in Utah?
Pignanelli: Toll roads are like roundabouts — they don’t belong in this country and should go back to Europe where they belong. Utahns have the common sense to understand their taxes paid for roads and it is ridiculous to impose another surcharge just to travel on them. Furthermore, residents along the west side of the Wasatch Front funded roads on the east side. It is unfair to now extract double taxation from these residents to resolve their transportation needs.
Webb: Utah isn’t likely to toll an entire highway (except perhaps a canyon road) for many years, if ever. Public opposition would be too strong. However, we can expect highway officials to use “congestion pricing,” which would essentially extend HOV lane tolling to additional lanes. As Utah’s population booms, that’s really the only way to prevent gridlock on the freeways and to push more commuters to use public transit.
In general, tax reform is proving very difficult. Will the Legislature accomplish meaningful reform before the 2020 political wars begin?
Pignanelli: The Legislature must be commended for dealing with an issue head-on (unlike Congress). But if potential long-term solutions are rolled out late this year, or in 2020, the usual forces of election campaigns will increase politicization of public deliberations — thereby warping the results of well-intended policies. Therefore, lawmakers should apply a Band-Aid to address short-term needs and enact larger overhauls in 2021. Broccoli always tastes better in odd-numbered years.
Webb: Our policymakers can get it done — eventually — but it’s going to be a lengthy process. And it might take more of a general fund crisis to force action. Tax policy is complicated and citizens don’t like tax changes even, apparently, if it means an overall tax cut.