No gas tax?
Few drivers like the gas tax, but the money is an important source for funding road building and maintenance. So is there a catch when it comes to a recent gas tax elimination proposal? N.C. State University economist Mike Walden answers.
“Well, this is a plan that came forth … about a month ago, not in our state, but in Virginia. The governor in Virginia announced the plan. Now it’s only a plan whereby Virginia would totally eliminate their state gas tax. Now there would still be a federal gas tax, but there would be no state gas tax. He would replace it with a new additional 1-cent general sales tax, with the revenues from that one cent dedicated to road improvement and road construction.
“Now that is a totally different way of funding roads. It’s caused a big stir – a big debate – in Virginia. Some say that this is exactly the thing that’s needed, because with higher fuel efficiency, people being more frugal drivers, the revenues from the gas tax are going down. People are very opposed to higher gas rates.
“On the other hand, people who support the gas tax say, ‘Hey, it is a user fee.’ What’s happening with the gas tax obviously is people who drive are paying for those roads.
“So, this is going to be very interesting to see how this debate goes in Virginia and whether those same kinds of proposals will be made in other states like North Carolina.”
Category: Economic Perspective