Highway
Jakob Puckett

Here’s some good news for those who think user fees are the best way to fund Missouri’s transportation needs.

Several bills have been introduced in the Missouri legislature, and one has made it out of committee, to raise the gasoline tax anywhere between one and ten cents per gallon. For the largest tax hikes, the changes would be phased in until the limit is reached, while smaller ones would take effect immediately. One bill would index the tax to inflation to ensure the tax keeps up with the rest of the economy. Another bill would place a surcharge on petroleum imports, taxing the distributers rather than consumers directly.

Considering all the proposals, the more modest changes could raise about $144 million, while the biggest increase could raise over $400 million. Other than the amount of money raised, what are other differences between these bills?

Indexing the gas tax to inflation is a good way to reduce future transportation funding crunches. Further, for each bill that would raise the gas tax on drivers, 30% of the revenue would go to cities and counties while the remaining 70% would go to the Department of Transportation (MoDOT).

The proposal to place a surcharge on petroleum imports rather than on drivers themselves could especially benefit MoDOT, though at the expense of local governments. Due to the tax not being on consumers themselves, all of the money raised would go to MoDOT’s state road fund and none to county and local governments, which also rely on gas taxes for local road maintenance. This bill would also lower income taxes in an effort to be revenue neutral.

Policy implementation aside, this boils down to a simple point.

According to a Missouri House Task Force, Missouri’s transportation infrastructure is “deteriorating (65),” jeopardizing traveler safety and economic growth. Roads and bridges are a vital part of our state’s economy, transporting nearly $500 billion of goods annually. Those who use them should contribute to their upkeep, and the standard means of doing so has become inadequate, as the spate of bills to increase the gas tax attests.

The problem has to be dealt with, or the whole state – drivers and non-drivers alike – will lose out. Infrastructure is a key component of the state’s long-term economic health. Since it must be recapitalized, user fees are the fairest and most efficient way of doing it.

 

About the Author

Jakob Puckett
Jakob Puckett
Analyst

Jakob Puckett received his M.S. in Economics from University of Illinois in 2019.