A Lot Has Changed Since 1993…Except the Federal Gas Tax

According to MinnesotaGasPrices.com, the average statewide price this week is $3.85 per gallon and rising.

Ouch.

But how much of the price at the pump is due to federal taxes?  It may be less than you think.

The United States federal excise tax on gasoline is 18.4 cents per gallon (24.4 cents for diesel fuel)—and has remained the same since 1993.  Since it’s a flat rate (not a percentage of the price, like a sales tax), tax revenues do not rise even if gas prices do.

This means the buying power of these revenues is significantly less that it was18 years ago.  That’s like you never seeing an increase in your paycheck to match inflation…since 1993.

Estimates by the Wisconsin Transportation Development Association suggest that the federal government would need to increase the tax to at least 28 cents per gallon just to recapture the purchasing power lost to inflation since 1993.

In this era of “no new taxes” and calls for streamlining government, I know that the topic of the gas tax is a controversial one.  But as a deadline looms for the reauthorization of the federal surface transportation program, it’s no wonder that funding is such a stumbling block.

Is raising the gas tax worth it to you?

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