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Inadequate Taxes Cause Bumpy Rides

Value Added: Oklahoma's motor fuel tax has not proved adequate to fund the maintenance of safe roads and bridges.
Inadequate Taxes Cause Bumpy Rides

Inadequate Taxes Cause Bumpy Rides

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Oklahoma Policy Institute

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Show Details

Show 1647: Inadequate Taxes Cause Bumpy Rides
Air Date: November 20, 2016



Rob McClendon: Among the recommendations to come out of this year’s Oklahoma Academy town hall meeting is the need to rethink our fuel taxes. Oklahoma currently collects 17 cents on every gallon of gasoline sold in the state. It is a flat rate that has not changed in years. And the same goes for the federal gas tax rate. If you will, consider this. Although gasoline prices have tripled since 1993, both the federal gas tax as well as our state gas tax, well, they haven’t budged one cent. With the federal gas tax remaining a flat 18.4 cents per gallon for the last 20 years. And when you adjust for inflation, it has actually fallen to just 12 cents a gallon. And here is why that matters. It is the revenue from the gas tax that goes to maintain our highways and bridges. But thanks to inflation, it has been effectively reduced by 35 percent. Now, last year the average American driver paid $99 in federal gas taxes and $110 in state fuel taxes, which, again, is an average, because when you look at the U.S. as a whole, here in Oklahoma we have one of the lowest fuel tax rates in the nation. In fact, at 35 cents a gallon, which is 17 cents state and just over 18 cents federal, we pay almost half in local and state fuel taxes than what residents of California and New York do. We even fare better than our neighbors of Kansas at 43 cents a gallon, Arkansas at 40 cents and Texas at 38 cents a gallon. And when you compare us as a nation to other industrialized countries, the difference is even more dramatic. When you add up local, federal and state gas taxes, the U.S. average is 41 cents a gallon. Compare that to Canada, which is almost twice that, while those in Great Britain and Germany pay over eight times what we do. So the next time you hit a pothole or – stuck in traffic -- know that while we may be paying less, we’re also getting less when it comes to the roads we all share in our daily commute.

Frank Sesno: America, can we afford the road ahead? Let’s look back to see where we’re going. In 1980, all those preppy Valley girls and yuppies drove about 18 miles a day; they already complained about traffic. But over the next 32 years, more cars and more drivers join them on the road, driving more miles on basically the same roads they did in 1980. Here’s the fact: Today we’re driving nearly twice as many miles as we did in 1980, but we’ve added only 6 percent more miles in public roads. We spend more than twice as much time in traffic; that makes us less productive. Cars that stand in traffic burn more gas, adding to pollution; those overworked roads break up and damage your car. As for the future, by the government’s own estimates, we’re short in keeping up with the roads we do have. It would be like driving the same car you did in 1980 and not keeping up with all the repairs.

Rob: And here is what the Oklahoma Academy is proposing – instead of a flat rate per gallon, the academy is proposing we tie state fuel taxes to the wholesale price of fuel. And while revenues from that tax will rise and fall according with gas prices, this new model enables the fuel tax to rise with inflation and actually fund the repairs it was intended to. And while other research groups and think tanks have recommended similar solutions, to date none have been adopted because it is hard to find consensus in either party of doing something that could lead to higher fuel prices – which this proposal would – even when that’s how we fund our roads and bridges.