Gas Taxes Keep Rising to Quell a Different Kind of Road Rage
The U.S. government, and the 50 states, keep Americans moving by funding road and public transit construction. They do this in large part by taxing gasoline. And those taxes have been going up.
Over the past decade, gas-tax increases have hit many parts of the country. The state of Washington is among the latest, having raised its levy by 4.9¢ per gallon to 67.8¢ per gallon on July 1. Northeastern states tend to charge higher gas taxes, while Midwestern residents enjoy lower rates. Pennsylvania has the highest tax nationwide, while Alaska has the lowest, according to the Tax Foundation.
For their part, the feds take 18.4¢ for every gallon sold to raise cash for highways, while state levies average of 26.49¢ per gallon, according to the U.S. Energy Information Administration.
One state where the debate over gas taxes has been fierce is New Jersey, known for its vast network of highways, roads, and bridges. For the better part of this summer, the state legislature there has been embroiled in a debate over whether to raise its gas tax to support the state’s Transportation Trust Fund.
The Garden State has the second-lowest gas tax in the nation, according to the American Petroleum Institute. Including the federal excise, state excise, and other state taxes, residents pay 32.9¢ per gallon every time they go to the pump. About 14.5¢ of that is made up of the state's levies and fees, according to the Tax Foundation. New Jersey doesn't rely on the gas tax for state and local road spending as much as most other states do. The state used gasoline and license taxes only to pay for 26.4 percent of state and local road spending as of fiscal 2013, according to the Tax Foundation. The average among states is 41.4 percent, according to the nonpartisan group.
The chart below shows the state's changes to the gas tax since the 1930s.
The federal gas tax, meanwhile, hasn't been raised since 1993—when it was set at about 18¢ per gallon. The tax supports the Highway Trust Fund, which allows the U.S. government to give money to state and local governments for transportation projects and provides some predictability as they evaluate their transit needs, said Rob Healy, the American Public Transportation Association's vice president of government affairs.
The state of the nation's highways and bridges has been a sore point of late both in Washington and in state capitals, and it is a recurring issue during the 2016 presidential campaign.
The Highway Trust Fund's spending has exceeded its revenue by more than $52 billion during the past 10 years, according to a 2014 report by the Congressional Budget Office. Last year, Congress passed the Fixing America’s Surface Transportation (FAST) Act, which provided additional money for the fund through fiscal 2020. Such groups as the American Society of Civil Engineers advocate that Congress must enact a long-term financial fix, such as raising the federal gas tax. If discussions about raising the levy return, there's likely to be push-back: The Republican Party's new platform states that it opposes an increase to the federal gas tax.
For interactive versions of these charts, see them here at Bloomberg Briefs.