Why Gas Taxes are the Holy Grail for Highway Funding

Washington is in the $500-$750 per capita. Close to the median compared to other states.

Some people oppose Gas Taxes and that Washington State legislators are seeking to increase our gas tax by a pretty penny. First understand that this article is not an assessment of how effectively they are spending the money they collect. It is only addressing how that money is collected.

To be clear: Washington state gets ALL of its highway funds from gas tax. Nothing comes from the general fund. This is different from other states who pay for highways out of their general fund. So it makes sense that we have a higher gas tax than other states. When you compare the total tax revenue spent on highways by Washington compared to other states, Washington is the 13th most populous state and ranks 14th in total spending on its highways. It is right at average for spending per capita for highways.

What stands out is that only Washington relies exclusively on gas tax to fund their highway infrastructure. There are two advantages to this: First, all revenue collected as a gas tax in the State of Washington is protected by the state constitution to be spent on our highways. Second, the gas tax is the most efficient method for collecting a tax of any kind.

Here is how it works: Washington State sends out tax bills to the roughly 200 oil refineries to collect some $3.5 billion in tax based on how much they produce. Then the gas companies are responsible for getting reimbursed by collecting the tax at the pump… and they are very efficient at it. It is a seamless, painless process for us. Also, anyone driving in our state pays it, not just residents (unlike other tax methods like pay-per-mile or tolls).

In fact, the gas tax is far and away the cheapest method to collect taxes. It costs only 1/2 of a cent for every dollar in tax collected. Compare that to the $0.30 per dollar of tax collected using toll roads and toll lanes. The error rate in gas tax is also non-existent compared to the estimated 3-5% error rate of tolling. (How many tolling errors have you had to deal with? And how many errors have they made in your gas tax payment? See?)

If we have to pay to maintain our roads (which have been neglected and underfunded for a long time) then let’s at least do it in the most efficient way possible. And the truth is, we see bigger swings in gas prices throughout the year at the whim of the oil companies to add to their profits than what the state is asking for in taxes to build and maintain our roads. If you want something to get angry about, let’s:

  1. Get rid of wasteful and socially inequitable toll lanes
  2. Hold WSDOT and our government accountable for how they are SPENDING the money that they collect
  3. Make sure they don’t try to bypass the state’s 14th amendment and spend gas tax money on other things.
Posted in Uncategorized
2 comments on “Why Gas Taxes are the Holy Grail for Highway Funding
  1. transpengr says:

    Great post, David. Kind of amazing that express toll lanes are promoted so heavily when the cost and hassle of collection is so disproportionate. As we know the original drivers of the concept were 1) the notion the lanes would gush money and 2) the Gregoire era Vehicle Miles of Travel reduction law (supposed to drive our cars 50% less by 2050) made it difficult for WSDOT to do general-purpose lane additions to the freeway system. And now the smart growth movement wants to do mileage-based collection of revenue but the downside of this as well as express toll lane collection is those methods can bypass the 18th amendment, which of course is the long game.

    I would only correct two items — “in”equitable, not equitable toll lanes; and 18th amendment, not 14th amendment.

    Like

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