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Iowa State University Economist Breaks Down Proposed Gas Tax Increase

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(WHO-HD)

AMES, Iowa – An Iowa State University economist has studied what a proposed ten-cent gas tax increase would cost drivers in Iowa.

Dave Swenson is an Associate Scientist in Economics at Iowa State University.  Swenson calculates that with the dime increase a person drives 30,000 miles in a year, in a vehicle getting 25 miles per gallon, it would cost $80 a year.  If you drive a truck or vehicle that gets about 10 miles per gallon, driving 30,000 miles, the increase would be $300 per year.

“In all, it’s not as much as people think,” said Swenson. “We know the state of Iowa has lagged in its maintenance, construction and repair across the board, with regard to roads.”

Swenson said not fixing the roads will also cost Iowans. “We are probably experiencing more wear and tear on our cars, or wasted time traveling because of our backlog in transportation spending, than the cost of this current increase.”

The proposed ten-cent increase would raise $200 million for the state.  Swenson said that would mean almost 1900 jobs in construction, supply, and main street business. “It there is a time to do it, this is the time,  we’re currently enjoying gas prices that are a dollar less than they were a year ago . . . If our road system deteriorates, it has consequences for the whole economy.”

Changing demographics are impacting the gas tax collection also. Swenson said vehicles are more efficient, younger people are opting to drive less or even not own cars. That means state officials may be looking at alternative models for funding road repairs.   Swenson said that could include a license surcharge, or even having people pay by how many miles they drive, but Swenson adds reporting how many miles you drive could create an incentive to cheat.

9 comments

  • The Phantom

    The tax is targeting the wrong people. It is not the average Iowa citizen that causes all the wear and tear on the infrastructure. It is large trucks; semi’s and farm equipment that cause the most damage and long term destruction. Raise the licensing on trucks over 2,000 lbs. and raise the tax on diesel

    • Bob Kutz

      Your comments point you out as being ignorant of a lot of facts.

      Virtually every single car that you see on the road is over 2000 lbs. There may be a few high performance or compact economy cars that are under a ton, but not too many. In fact ALL of the hybrid and electric cars currently being sold have a gross curb over 2000.

      Further, the weather is the single most destructive influence on our roads, not trucks or even farm equipment. Freeze/thaw cycles and de-icing, whether chemical or mechanical, do far more damage to our roads than any legal weight vehicle, by an order of magnitude.

      Finally; they did raise the licensing on trucks. All of them. Very substantially in fact. In 2008 truck license fees were nearly tripled. Currently licensing fees on trucks outweighs that on cars by more than 4 to 1.

      We need this gas tax and we need it now. The gas tax is the only way to get out of state users to pay for their use of our roads.

      As far as raising it on diesel; I believe that the diesel tax already exceeds the gas tax, and any legislation that increases the gas tax will almost certainly include a diesel tax increase.

      I do not agree with very many types of tax increase, but the Constitutionally protected user fee on gas in one that does need to be increased.

      We are currently maintaining our roads based on the 1989 cost of doing business. It is not working.

  • Brad

    How about, no tax increase at all?

    You know, I like that better. They can cut some of the excessive amounts of state government fat to save the 200 million pretty easily because there is a whole lot of fat to trim. They NEVER make any meaningful cuts though, so they always have to keep increasing taxes to fund new things. Time for government employees to feel the cycles of the economy like the rest of us.

  • Randy Graven

    I have to have a heavy duty pickup to haul my tools, welder, air compressor, etc. in. I have a diesel because it gets twice the mileage a similar gas truck does. I don’t even own a car. Why should I pay more fuel tax than I already do? Why are the big real estate developers and pipeline companies, etc. getting big tax breaks when the rest of us have to pay through the nose? Now they want the people who work for a living to pay even more. What a crock of manure.

  • Mike Cee

    Imagine that. Someone who makes a living at a University funded in part by the taxpayer who is all for raising taxes and trying to talk the rest of us into justifying it as just a small increase. Yet the massive amount of waste that the Iowa DOT (another state funded government agency) is never addressed or even a concern. These government and quasi-government employees need to find a job in the real world, where businesses and people actually live within their means.

  • Schorcher

    Do the math again please on the 30,000 mile driver. I get $120.00 more in cost, but I’m not a math whiz. With that,my budget ended the year with $800.00 in the account.Take $120.00 out for gas tax and what ever out for this and that tax…and I’m in the hole :-(

  • Homer

    Large trucks already pay, whether they buy fuel here or not. Ask IFTA. Then they pay 1800 or more for a license plate. Then the Road Use Tax of $ 650 that nobody can explain. Now the gas is on decline, which we all know it won’t stay long, and they use that as an excuse for a tax that WON”T go away.
    When this tax was designed, it should increase with the amount of cars. You say better gas mileage, I say less weight on cars, so that should equal out. We are taxed enough already. How about spending less on the office jobs at the state, troopers don’t really need 50 to 120,000 a year do they? Deputies don’t need SUV’s etc. The guys that work on the highways seem to make the lesser amounts, why is that? The money is there, it’s spent for the wrong reasons.

  • leowaj

    I would like to see a study that examines wasteful spending at the State level and determines if roads could be fixed by using the money saved from slashing wasteful spending. Such a study is not likely to happen, though.

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