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Gas Tax Should Take a Hike

Paige “Duffy” Lewis

April 30, 2015

 

Republicans and other conservatives routinely prosyletize about the economic benefits of low taxes, how raising taxes does not magically translate into increased revenue, and that excessive taxes are coercive theft of Americans’ wealth.  Old-timey Democrats and populists, those that have not became Democratic Socialists, argue that sales taxes are regressive and hurt the poor and lower-middle class disproportionately.  So, why are so many Repbublicans and Democrats in South Carolina supporting a raise in the state gasoline tax?

Economists oftennc-gas-tax-increase-620x273 cite state tax policy as a tool for being competitive with other states and other countries.  Gov. Nikki Haley and former U.S. Senator Jim DeMint claim that raising S.C.’s gas tax makes S.C. more competitive.

South Carolina’s low gas tax has served as an incentive for businesses and residents to choose S.C. over other states.  North Carolina’s gas tax of 37.5 cents per gallon is significantly higher than S.C.’s 16 c.p.g.  Lower gas prices result in travellers and N.C. residents crossing over state lines to buy gas in border cities, such as Rock Hill.

Florida, where tourism is as economically significant as it is in S.C., charges residents and tourists a gas tax rate that varies from 28.3 – 36.3 c.p.g., depending on the area.  Florida drivers also pay $5.52 in “other taxes” with every gallon.  Florida has a higher cost of living, as proved with its high gas prices, making S.C. more competitive.

Economists have an annoying way of reminding us to ask, “What is the source of the problem?” before we try to fix it.  “Our roads need improvement.  What is the source of that problem?  Is it a lack of overall funds, or is it that the current way funds are being allocated across projects isn’t good,” says Dr. Russell Sobel, economics professor at The Citadel.

Spending on other issues — tree removal, tree planting, lane closings, lane conversions — takes money away from needed road maintainence and repairs.  “If spending is better allocated, and roads are still a problem, then a tax increase would be better justified,” Sobel says.

The State Transportation Infrastructure Bank (S.T.I.B.) Chairman Donald Leonard has stated publicly that the bank has about $150 million to finance projects over $100 million, which frees up the Department of Transportation to handle smaller projects, repairs, and maintenance of existing roads.  No new taxes are needed for the S.T.I.B.

What about Department of Transportation funding and management?

At a State House rally February 10, S.C. Treasurer Curtis Loftis opposed the gas tax increase, “Let’s reform the D.O.T. and the Infrastructure Bank, and then debate the issue.  If we want better roads, demand transparency and accountability in roadbuilding and financing now, otherwise, its more of the same while paying higher taxes.”

Others support the gas tax.  Sonoco C.E.O. Jack Sanders supports raising the gax tax, “because we have to do something.”  Doing something does not automatically mean raise taxes.

Resistance to tax increases is most often tied to frustration over how current tax revenue is spent.   Assuming that the given is true, why are S.C.’s roads in poor shape?  Is it poor construction or negligent maintenance?

If state and county funding were better prioritized and budgeted for long-term infrastructure planning, our roads would be in better shape.  Gas tax money goes into the state’s general operations fund, so the “something” that needs to be done is to designate gas tax revenue for road construction, repairs, and maintenance exclusively.  Then, we can track how effeciently the gas tax is spent.

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