A conversation is developing about the gas tax and also about how to protect
low and middle-income tax payers from additional financial stress.
Currently the gas tax is at 21 cents per gallon. Some neighboring states
have gas taxes twice that high. If we doubled the gas tax to 42 cents per
gallon, it would generate approximately $600 million per year.
The case for a gas tax increase is straightforward: We face a gap of
roughly $1 billion per year over the next 20 years in transportation funding
needs. Much of this gap is attributable to the Big Dig which we are still
paying for. For more on the gap, see this link:
http://www.eot.state.ma.us/downloads/tfc/TFC_Findings.pdf . Our state
constitution requires that all revenues from the gas tax be used for
transportation infrastructure construction and maintenance and for mass
transit. Proposals for reorganization of the transportation bureaucracy
have kicked around for years, but no one really expects that moving the
organizational boxes around will save real money.
The alternative to a gas tax is a toll increase or some other form of
transportation user fee. There is much to be said for a broad based system
of open road tolling — electronic collection that requires no slow downs.
Cities around the world are using variable rate tolls to induce drivers to
shift their commuting to less congested times. This revenue raising
strategy helps save construction money by reducing the need to expand
highway capacity. But the political complexities involved in designing such
a system might be overwhelming.
The Turnpike Authority Board, to cover debt obligations, has voted a toll
increase which increases already unfair burdens on certain groups of users.
Commuters from the West on the turnpike are already paying for the Big
Dig — commuters on 93 from the South or North benefit dramatically from the
Big Dig, but are not contributing to its cost.
The Governor boxed himself in by opposing a gas tax increase during his
election campaign. Similarly, some of the key senators involved represent
districts that have a lot of long distance commuters on Route 93 in them.
I like the idea of a gas tax increase because it is simple and it broadly
distributes the burden of paying for the mistakes of the Big Dig (as well as
for necessary maintenance on all the other roads of the Commonwealth and
mass transit). I also like a gas tax because it rewards people for using
less gas — there’s nothing more patriotic than saving gas: Our
dependence on foreign oil exposes us to terrorists and damages the
environment. A gas tax increase could be combined with an elimination of
unfair local tolls, and even with the institution in the long term of fairer
transportation user fees.
The principle concern that I have about a gas tax increase is that it will
burden low and moderate income families. A family of 4 making $50,000 per
year would be at just under 60% of state median income and would be eligible
for heating subsidies, housing subsidies and health insurance subsidies.
Yet this family might be paying well over $1,000 per year in state income
tax and a gas tax increase of 20 cents might cost them as much as $200 per
year, depending on their driving patterns.
Some of us have been discussing a substantial increase in the personal
exemption to the state income tax. An exemption structure which eliminated
income taxes for families at the 60% of median income level could be offset
by an increased rate. Families with incomes below the exemption would
reduce their income taxes to zero. Middle income families — $50,000 up to
$150,000 would see a more modest tax savings. Families at the high end —
over $150,000 would see a two to three point increase.
This kind of middle class tax relief could be used to cushion the impact of
a necessary gas tax increase. For more discussion of this concept, see the