Highway Robbery: Missouri Senate Passes Sales Tax Hike For Transportation

Yesterday, the Missouri Senate passed a bill that would use an increase in sales taxes to pay for transportation projects, mainly state highways and bridges, throughout the state. As we have discussed in op-eds and in testimony before the Missouri Senate, this sales tax is the wrong way to solve the Missouri Department of Transportation’s (MoDOT) funding problems. A few of many criticisms:

• The bill will create a bonanza for new major road construction as well as significant dollars for whatever transportation project local planners see fit. Don’t drive much, if at all? Now you get to pay to expand urban highways. Don’t live in Kansas City? Now you also can pay for the city’s $500 million streetcar. The amount of money Missourians pay will have nothing to do with how much they use or benefit from the project. The lack of a connection may be necessary in other areas of government, but a connection is imperative for transportation funding.
• The tax is regressive and unfair. While the sales tax will hit people of all walks of life, the main beneficiaries will be those who use the highways most, chief among them interstate truckers. According to an industry representative, 45 percent or more of the traffic on major Missouri highways is trucking, many of whom might be transiting the state and not paying the sales tax. A poor family that uses transit in Saint Louis should not be paying more for the I-70 rebuild than a semi headed from Denver to Indianapolis.
• It is unsustainable, bad economic policy, and not temporary. MoDOT is driving off the funding cliff because Missouri has not made the necessary alterations to its user tax base to pay for state roads and bridges. The bill, far from fixing those problems, specifically does not allow alterations to that tax base while proposing a non-user tax that will encourage overuse of roads, pollution, and sprawl. Ten years from now, all of MoDOT’s underlying tax base problems will be worse, meaning an indefinite extension of the sales tax hike.
• A 1 percent or .75 percent sales tax would be one of the largest tax increases in recent state history (taxing Missourians to the tune of $534 million per year), and almost nullify the effect of the proposed income tax cut, should that ever come into force.

If the state legislature and the people of Missouri seriously wish to fix transportation funding in this state, they need to look for economically sound policy solutions and not short-term fixes that cause greater problems down the road.