(This post is part of a series.)
The Seattle Times editorializes today in favor of a four cent per gallon hike in the Washington state gas tax.
Now, I’m typically in favor of higher gas taxes, on the grounds that the fuel’s massive externalities—ranging from overseas defense costs, to government subsidies to oil companies, to infrastructure costs for roads and highways, to global warming and air pollution—aren’t reflected in the price that consumers pay at the pump.
So in principle I should be in favor of a gas tax hike. But, in this case, I think the editorial is doubly mistaken.
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First, the editorial suggests that the reason to support gas taxes is that they can help pay to rebuild the region’s crumbling transportation infrastructure—most notably, the Alaskan Way Viaduct and the SR-520 floating bridge. And according to the editorial, other infrastructure needs “abound”, including “structural changes to allow passage across Interstate 90 at Snoqualmie Pass during winter storms, bridges that need upgrades and the Interstate 5 bridge to Oregon…”.
But let’s do some simple arithmetic. Washington state residents burn about 2.6 billion gallons of gas each year. (That’s about 1.2 gallons per resident per day.) So a four cent per gallon tax on gas would bring in about $105 million per year.
That may seem like a lot. But it isn’t. Take just, for instance, the current $4.1 billion plan to replace the Alaskan Way Viaduct, the aging highway that hugs the Seattle waterfront, with a tunnel. If that project is ever undertaken, it’s likely to be financed with long-term bonds—meaning that taxpayers would have to pay interest on the bonds over the next 30 years or so. As of today, municipal bonds are earning a 4.7% rate of return. So the interest alone on $4.1 billion would be $192 million per year. To pay back the principal plus interest (see, for example, this handy mortgage calculator) would take $250 million per year.
In other words, a state gas tax of four cents per gallon wouldn’t even begin to pay for one of the projects mentioned in the editorial. Four cents is just the tip of the iceberg.
And this is doubly true, given the political reality that gas taxes are generally parcelled out by population; that is, it’s very unlikely that a single project in downtown Seattle would command a disproportionate share of the entire state’s gas tax. As we’ve argued before, most of the costs of the Viaduct will likely be borne by people who live in or close to the city itself—meaning that a four cent gas tax might be enough to contribute $10-$15 million per year to the Viaduct. Chump change.
So if the editorialists really wanted to pay for the infrastructure wish list they mention in the article, the honest thing to do would be to support a major gas tax increase, not just a piddling one of four cents per gallon. They’re off by a factor of 10. Maybe they think a small gas tax hike is better than none at all—but at least they should be honest, and say that it won’t even begin to pay for what they say the state needs.
My second objection to the editorial is that it perpetuates what I think is fundamentally a mistaken way of looking at gas taxes: namely, that gas taxes are simply users fees, and that gas tax receipts should automatically be plowed back into building and maintaining highways.
That’s a fair enough description of how things are right now. But it singles out gas taxes for special treatment. Sales taxes, income taxes, property taxes, and the like wind up paying for a huge range of social and political ends—defense, medical care, parks, you name it. So why is that gas taxes alone are considered to be “user fees” that have to be devoted to building roads? As it turns out, the special treatment for gas taxes is an accident of history, not a logical necessity.
And even if gas taxes are just users fees, then how come they’re just devoted to roads? That leaves out all of the other external costs of gasoline & driving—pollution, international defense, and the like. A real users fee would go to pay for all of the external costs of driving, not just the cost of roads.
I’m for gas taxes. But I’m also for honesty—and a four cent gas tax, devoted exclusively to road-building, deceives drivers about the true costs of maintaining a gasoline-powered lifestyle.