State governments are losing out on over $10 billion in transportation revenue each year, due to states’ reluctance to raise fuel taxes, according to a study released Wednesday.
The Institute on Taxation and Economic Policy study shows that the shortfalls are contributing to an estimated $130 billion drain on the economy, resulting from higher vehicle repair costs and travel time delays.
The report, “Building a Better Gas Tax: How to Fix One of State Government’s Least Sustainable Revenue Sources,” says that states on average have lost about $200 million in annual revenue.
That is exacerbated by the fact that the federal gas tax, which also supports state transportation projects, has lost 41% of its value since it was last raised in 1993.
“Unfortunately, many politicians won’t consider touching the gas tax,” said Carl Davis, senior analyst at ITEP and the study’s author.
“They are raising sales taxes, fees on vehicles, tolls on roads, even looting education funds, all to make up for the stagnant gas tax. But they can’t bring themselves to modernize the biggest source of transportation revenue that’s actually under their control,” he said in a statement.
