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State gas tax policies have changed a lot in recent months, which makes two new fact sheets from the Institute on Taxation and Economic Policy (ITEP) especially useful in understanding where states stand on this issue.
The first fact sheet shows that 24 states have gone a decade or more without increasing their gas tax rate, and that 16 states have gone two decades or more. This lack of action has allowed for a significant drop in the purchasing power of these states’ gas tax dollars as the cost of construction and maintenance has increased. The worst gas tax procrastinators are Alaska (43.9 years), Virginia (27.3 years), Oklahoma (26.9 years), Iowa (25.3 years), Mississippi (25.3 years), and South Carolina (25.3 years).
The fact sheet also shows that four states are “celebrating” gas tax anniversaries this week. As of April 1st, it has been exactly 18 years since Idaho and Missouri raised their gas tax rates, while South Dakota and Wisconsin have gone 15 and 8 years, respectively. The only state raising its gas tax this April 1st is Vermont, where the rate is rising by less than a tenth of a penny per gallon.
The second fact sheet from ITEP puts a spotlight on those 18 states, plus the District of Columbia, that actually levy a smarter gas tax. Rather than going years on end without a change in their gas tax rates, these states allow for modest increases in their tax rates each year through the use of a “variable-rate” tax that rises with inflation or gas prices.
As a result of reforms enacted in four states last year, a majority of the country’s population now lives in a state where the gas tax rate is “indexed” in this way. This isn’t a radical idea. More states, and the federal government, should take a serious look at switching to a variable-rate gas tax.
Read the fact sheets: