There Aint No Such Thing as a Free Lunch: Why voters oppose higher fuel taxes

Wednesday, August 11, 2010

Why voters oppose higher fuel taxes

Most voters do not like taxes and tax increases. One of the few taxes that was generally accepted and even welcomed when it was first enacted was the tax on gasoline. Unlike most other taxes, Americans recognized that paying this tax would result in improved roads and highways, which they valued. More recently, however, state legislatures and the US Congress have experienced widespread public opposition when they consider increases in gasoline taxes, in spite of growing concern about deteriorating bridges and highways.

Recent strong opposition to fuel tax increases does not mean that Americans are less willing than before to pay taxes in order to have better roads. What it does reflect is voters’ opposition to money paid in fuel taxes being used for purposes other than highway spending. In recent years almost 20 percent of money paid into the Federal Highway Trust Fund (FHTF) has been spent on mass transit. In addition, FHTF money is being spent on recreational trails, historic preservation, and scenic easements. Besides the FHTF money allocated for nonhighway purposes, a growing share is used for earmarks, which reflect political priorities of individual members of Congress rather than the priorities of highway users who pay gasoline taxes. Many drivers do not want to pay higher fuel taxes when less than 75 percent of the money paid in federal fuel taxes is used to maintain and improve streets, highways, and bridges.

Is the answer then a return to the good old days when fuel tax revenue was used in a (relatively) responsible manner? That may no longer be possible. The federal government and many state governments are now controlled by a ruling class that has little respect for the preferences of the general public. Instead, they seek to impose their enlightened ideas of how society should be organized. Hence, they may continue to seek to use fuel and other taxes to subsidize public transit and otherwise promote greater density and less automobile use, even if this is contrary to the wishes of the general public.

Widespread opposition to increases in fuel taxes at the federal or state level thus reflects a fundamental distrust of government. This distrust is based on evidence that the ruling class has its own agenda, which is inconsistent with the preferences of the general public. Given their smaller size, state governments may be more accountable to the voting public, and thus more likely to spend fuel taxes wisely. Recent failure to pass an increase in fuel taxes by the Pennsylvania legislature, however, suggests that voters are not yet ready to trust the Commonwealth to make good use of additional fuel tax revenue. If the federal and state governments can no longer be trusted to spend tax money wisely, a better approach may be to develop innovative local approaches to funding transportation.

Labels: fiscal federalism, political economy, Public transportation, user fees