Op-Ed: a Concealed Gas Tax Increase Is the Furthest Thing From What Kentucky Needs Right Now.

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The agony at the pump is palpable. With gas prices on the rise, a hidden tax increase on motor fuels is the last thing Kentucky needs right now, but that is exactly what Frankfort is considering. The state government is loaded with cash, due in part to $6.4 billion in stimulus and infrastructure funds from Washington. With the state’s Road Fund doing well and inflation skyrocketing, one would expect that gas taxes should be kept the same, if not reduced, as Governors in Florida, Virginia, and Illinois have advocated.

However, not in Kentucky. In this case, politicians are still debating whether the gas tax should be “indexed” to the Consumer Product Index or the National Highway Construction Cost Index. That is, as prices for everyday consumer products rise in the future – as they usually always do – vehicle fuel taxes will inevitably rise as well. Because the amount of the gas tax will be set by a mathematical equation, lawmakers will not even have to vote to make this happen if indexed.

That is the problem. By substituting a math problem for human judgement, the fundamental basis of electoral accountability is undermined. Future politicians will be able to state honestly that they did not vote to raise the gas tax, despite spending hundreds of millions of dollars in new tax revenues that ordinary Kentucky residents will pay at the pump. Legislators who vote to raise taxes should do so openly so that people can evaluate whether their actions merit another term. With the indexing idea, that fundamental degree of accountability is gone.

 

Gas Tax

 

Even if legislators approve to index the gas tax, it is far from certain that the result would be improved roads. According to the American Petroleum Institute and the Reason Foundation, seven states that have indexed their gas taxes have higher gas taxes and worse roads than the national average.

The average Kentucky resident travels 16,305 miles per year. Indexing implies that Kentuckians will automatically pay more each year as inflation rises indefinitely. Even more significant, studies show that the gas tax takes a bigger percentage of income from low- and middle-income households than from high-income households. Indexing the gas tax to inflation has a direct negative impact on democracy and is disastrous for drivers. Gasoline is not a luxury item; it is just as important as groceries. It transports Kentuckians to work, school, church, medical appointments, and the essential products they require every day.

However, the proposal’s unintended consequences are far-reaching. When the cost of fuel rises for industry and business, the expense must be passed on to consumers. As fuel prices rise, so do the prices of all consumer items. That’s when the simple math of indexing comes in and forces gas taxes even higher, raising the price of both fuel and consumer products. That’s a never-ending circle.

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Good infrastructure is critical, and it is not cheap, but passing a concealed gas tax rise in the form of indexing future motor fuel prices is not prudent. It is detrimental to Kentucky taxpayers. The General Assembly should reject any rise in fuel taxes related to an index as they prepare to enter the conference committee behind closed doors where these kinds of decisions are made.

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