September 20, 2014

Economists say lawmakers should consider benefits of gas tax increase

Two economists from Midwestern universities suggest the economic benefits of better roads should be a consideration as Iowa lawmakers ponder the state’s gas tax. Creighton University economist Ernie Goss says he is “supportive” of taxes which are used for well-known purposes — and the gas tax is used specifically for road maintenance and construction.

All taxes, to some degree, are economic depressants, but the positive on the infrastructure side could outweigh that,” Goss says. “In other words, having poor roads is not what you want in Iowa.” Iowa State University economist David Swenson says it’s not just state roads that get financed by the gas tax, but city streets and county roads are built and maintained with that money, too.

“If I just looked at the average Iowa commuter over the course of a year, a 10 cent (per gallon) increase in the gas tax would cost them a whopping about $32, so we’re really not talking about a tax that’s going to have a significant impact on your average household,” Swenson says.

“But not having good roads, having roads that are in disrepair is hard on your cars and increases costs (to drivers).” The state’s gas tax is currently 22 cents per gallon and hasn’t been raised since 1989. A task force appointed by the governor recommended this fall that the tax be raised by up to 10 cents per gallon because the combination of vehicles getting better gas mileage and a growing list of bridge and road repairs isn’t meeting current needs.

The governor has said he’ll oppose raising the gas tax this year and he’s asked the Iowa D.O.T. to find $50-million in savings to divert to road projects. The lawmakers who are chairmen of the House and Senate Transportation Committees are backing a bill that would hike the gas tax, but key legislative leaders say without the governor’s backing lawmakers are unlikely to pass the bill.