Opinion by Erin TaylorWritten by Erin Taylor
By Erin Taylor, Executive Director, Wyoming Taxpayers Association
News media has recently focused on the need to increase funding for Wyoming’s highways and, indeed, a Legislative super committee met in June to discuss options. The bottom line is that the Wyoming Department of Transportation is short $135 million per year, and by 2030, 82 percent of Wyoming roads will be in poor condition without increased funding. Poor roads equate to more wear-and-tear on our vehicles – and then we are forced to reach for the pocketbook. Ask yourself, what is the cost of doing nothing?
The governor and lawmakers suggest that all options are on the table to bring in more revenue, and the super committee moved a few of these options forward for consideration in August, including a fuel tax increase (amount not specified), increases in registration and driver license fees and the possible addition of a state sales tax on fuel. Realistically, it’s one of these options – increasing the fuel tax – that really makes good sense. It’s not because our fuel tax is the second lowest in the nation, and it’s not even because that tax hasn’t been increased since 1998. It’s because it simply meets the test of good old-fashioned economics. A fuel tax is a good tax, and here’s why:
Fuel taxes, in their simplest form, are often touted as being one of the most efficient forms of taxation, adhering to sound economic principles such as equity, stability and transparency. The concept really is simple - Wyoming’s fuel tax is a user fee. As a user fee, a fuel tax provides a system of road funding by simply charging road users when they fill up their tanks. So everyone who uses the road pays the tax, and no one enjoys an advantage over another user.
Here in Wyoming, we pay two taxes on gasoline - federal and state. The federal tax is currently 18.4 cents per gallon for gasoline, which amounts to $4.23 on a 23-gallon tank. In a like manner, diesel is taxed at 24.4 cents per gallon. On the state side, we are paying a total of 14 cents per gallon for both gasoline and diesel. This includes a base rate of 13 cents per gallon plus one cent per gallon that is directed toward environmental cleanup costs for leaking underground storage tanks.
Almost 60 percent of Wyoming’s gasoline taxes are directed to the Wyoming Department of Transportation to use for reconstruction, operation and maintenance, while the remainder is directed to cities and counties. Diesel taxes overwhelmingly go to highways (75 percent), and the rest is directed to county roads (20 percent) and municipal roads (five percent).
Will we feel it at the pump? It’s likely, but not for long. Wyoming’s combined state and federal fuel tax (cents per gallon) is, at the lowest amount, eight cents less than our neighbors to the south, and at the most, more than thirteen cents less than our neighbors to the north. Yet prices at the pump are not that much different when you cross the border – distributors will have to adjust to keep themselves competitive, and prices will even out.
Ultimately, it’s going to be a long road this summer to educate Wyoming citizens about this important issue, and with elections facing lawmakers this fall, it should be an important talking point for all candidates. The Wyoming Taxpayers Association is just one group that supports the fuel tax. Others include truckers, contractors, miners, fuel distributors, agriculture producers, hospitality and tourism, and the list goes on. If we take care of our Wyoming roads, they will take care of us.
Erin Taylor is the executive director of the Wyoming Taxpayers Association. The Wyoming Taxpayers Association has been Wyoming’s leading tax policy and research organization since 1937 and is made up of members from all industry sectors, business, agriculture and individual taxpayers.