Bluegrass Beacon: Legislature should dump proposed fuel-tax hike

Every direction you turn at the Capitol these days the discussion centers on what rocks need overturning to find more revenue under the unproven – and categorically untrue – assumption that the 22 billion of Kentucky taxpayers’ hard-earned dollars collected during the current budget biennium fail to provide sufficient funding for necessary services citizens expect from state government.

Even though Republicans control the legislature, the current environment at the Capitol – at least when it comes to taxes and spending – doesn’t seem much different than when the Democratic left controlled the House of Representatives prior to the GOP takeover in 2017.

This situation gets even more tenuous when both parties gang up on taxpayers.

Five Republicans and four Democrats have started the raid by co-sponsoring legislation to raise the state’s gas tax by more than 8 cents a gallon with diesel facing an even higher 11-cent hike.

Why hasn’t there been a vigorous debate regarding the distressing consequences of raising taxes on diesel fuel – vital to vibrant industry and, by extension, a booming economy?

Adding an 11-cent tax to diesel fuel would force truckers stopping in Kentucky to shell out, on average, $825 – up from the current $790 – to fill up their 300-gallon rigs, according to AAA daily gas-price data.

How many stops for fuel does it take before the financial pain of losing an extra $35 per fill-up is felt?

The hike would cause car drivers to dig, on average, for an extra $5 each time they fill up with mid-grade gasoline.

Supporters of raising the gas tax blame more-efficient vehicles and the resulting drop in fuel-gallon purchases, which mean fewer dollars from the gas tax flowing into the state’s transportation fund.

So, let me get this straight.

Politicians are going to use the force of government to punish the marketplace for responding to the government’s incessant call for more environmentally friendly vehicles and the Kentuckians who drive them?

What other description so aptly fits a proposed $200 across-the-board “fee” tacked on to registration costs for owners of electric cars in the gas-tax legislation under consideration in the General Assembly?

Frankfort claims hiking fuel taxes will result in an additional $484 million clanging into government’s coffers.

Maybe, but probably not, since – as government forecasters rarely consider – people change their behavior when incentives change.

Raising taxes creates a whole other set of incentives for drivers to find ways to dodge the higher levies by purchasing less fuel.

Also, tax something – anything – and time-tested principles kick in, including: the more you tax something, the less of it is produced.

What impact could this have on fuel production?

“But, but, but…we don’t have the money we need for repairs and new roads needed in our community,” cry the gas-tax hikers.

But, but, but … the problem isn’t that there are insufficient funds to meet this need. Rather, it’s that gas-tax dollars designated for the state’s road fund are being used for other programs.

Incredulously, Democratic Gov. Andy Beshear’s budget proposes raiding $241 million from the road fund to finance his big-government, big-spending wish list.

Such swiping is an all-too-regular occurrence in Frankfort and often is followed by gripes about a shrinking number of dollars available for new-and-improved roads and the need for raising the gas tax to fund them.

How many roads could get built and bridges repaired for $241 million?

Before we go raising taxes, why don’t we find out the results of spending 100 percent of transportation dollars on…transportation funding.

What a novel idea!

Even if the tax increase passes, what assurances do taxpayers have that a big chunk of it won’t end up funding Beshear’s campaign promises to teachers’ unions? If the GOP majority goes along with the Democratic governor’s fund-swiping plan, what are taxpayers to do?

Jim Waters is president and CEO of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free-market think tank. Reach him at jwaters@freedomkentucky.com and @bipps on Twitter.

The Bluegrass Beacon is a weekly syndicated newspaper column posted on the Bluegrass Institute’s website after being published by newspapers statewide.