Gas Tax Proposal Overlooks The Real Issue
A few weeks ago, small business owners were shocked to read about a downtown Boston business coalition that called for the support of a 25-cent-per-gallon increase in the state’s gasoline tax — six cents higher than Governor Patrick’s proposed increase, which already would require Massachusetts’ drivers to pay the nation’s highest levy.
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Since the proposal was unveiled, a coalition representing more than 25,000 employers throughout the commonwealth have joined together to oppose this increase. Small business owners are adamant: Reform the state’s transportation bureaucracy before raising taxes.
Much attention has been paid to necessary road and bridge repairs and the state’s need for additional revenue to accomplish this goal. Indeed, a well-maintained infrastructure is a key component to growing our state’s economy.
But there is an existing revenue source — the current 23.5-cent-per-gallon tax —much of which has been diverted to other transportation needs over the years. Many supporters of the gas tax increase actually want to extend the diversion of gas tax revenues from road and bridge repair, basically using the poor condition of our roads and bridges to increase taxes for spending elsewhere.
Perhaps even more importantly, little attention has been paid to the economic impact an increased gas tax will have on our state’s economy.
The economic impact of making the gas tax the highest in the nation is significant. First, the price of gasoline affects consumers’ overall spending habits more than any other factor. As tourists, long haul drivers and sales and delivery personnel avoid gasoline purchases, the potential proceeds from the gas tax and other sources of state revenue will be reduced.
Consumer consolidation of purchases will lead to out-of-state sales of groceries, clothing and appliances.
Secondly, the tax on gasoline, like taxes on most necessities, is highly regressive, falling most heavily on the people of lesser means. Third, tying the gas tax to inflation is a “stealth” provision that will allow this excessive, regressive and economically damaging tax to increase every year without legislative approval.
Many of the suggested changes in transportation policy and organization — the creation of a unified surface transportation system, acceleration of the road building process, and reforms of employee benefits — would reap significant resources that could be applied to our transportation needs.
These reforms need to be implemented before small employers are asked to bailout the state’s transportation bureaucracy through higher taxes. Small businesses are the backbone of our state’s economy, with 95 percent of our state’s employers having fewer than 50 workers. Historically, more than two-thirds of the new jobs in our state are created by small businesses every year, and it is long overdue for those facts to be reflected in the state’s tax and economic policy.
Small employers are struggling to survive in an increasingly hostile economic climate. Until major cost-saving measures are implemented and the savings determined, the citizens of Massachusetts and the small companies where they work should not be asked to bear the weight of a gas tax increase, especially when it will fund the ongoing support of a culture of irresponsibility, mismanagement, and overly generous giveaways that permeate our transportation bureaucracy.
Raising taxes to bail out an inefficient and wasteful system is not reform; it simply is business as usual.
Bill Vernon is the Massachusetts state director of the National Federation of Independent Business. He can be reached at bill.vernon@nfib.org.
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