A fuel tax is a good tax

By Erin Taylor – Executive Director of the Wyoming Taxpayers Association

News media has recently focused on the need to increase funding for Wyoming’s highways and, indeed, the facts are there. The Wyoming Department of Transportation is short $135 million per year, and by 2030, 82% of Wyoming roads will be in poor condition without increased funding. Poor roads equate to more wear and tear on our vehicles – and that becomes personal. Ask yourself, what are you willing to do to have better highways?

The Governor and lawmakers suggest that all options are on the table to bring in more revenue, including increasing the state-wide sales tax, a ton mile tax, toll roads, or increasing the fuel tax. Heck, why don’t we throw a state-wide lottery in there for good measure and dedicate the revenue to highways? Realistically, it’s one of these options – increasing the fuel tax – that really makes good sense. It’s not because ours is the second lowest in the nation, and it’s not even because it 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 1 cent per gallon that is directed toward environmental cleanup costs for leaking underground storage tanks.

Almost 60% 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%) and the rest is directed to county roads (20%) and municipal roads (5%).

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 will be doing just that – traveling around to local communities to educate folks on the need for highway funding and how a fuel tax can help. Wyoming’s roads are the lifeblood of our economy and the gateway to our Wyoming way of life. Let’s take care of them, so they 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.