Louisiana losing ground on the gas tax

With Louisiana facing a $12.7 billion backlog of unmet construction needs on its roads, bridges and ports, a new report finds that the purchasing power of the state’s gasoline tax is at a 20-year low.

The report by the Institute on Taxation and Economic Policy found that Louisiana would generate an extra $327 million per year for road and bridge construction if the state’s 20-cent per gallon gas tax had kept pace with growth in the cost of road construction since 1990. Returning the tax on diesel to its 1990 purchasing power would bring in an additional $106 million for road repairs.

The erosion of the gas tax has made it harder for the state to invest in construction and repair projects that would help drive economic growth by reducing traffic congestion and vehicle wear and tear—saving consumers and businesses millions in repairs and time lost stuck in traffic.

The report says Louisiana isn’t the only state where gas taxes have failed to keep up:

Most state gas taxes are built to fail, and cannot generate sufficient
transportation revenue today or in the long-term. Overall, this report
estimates that the states are losing $10 billion in annual gas tax revenue
that could have been collected if they had planned for inevitable
increases in the price of construction materials the last time they
raised their gas taxes. This $10 billion shortfall is a major contributor
to the $130 billion that the American Society of Civil Engineers
(ASCE) estimates is lost each year due to vehicle repairs and travel
time delays caused by deficiencies in America’s transportation systems.

Louisiana hasn’t raised its gas and diesel tax since 1989, when voters approved a constitutional amendment that raised the tax by 4 cents per gallon and tied the revenue to specific projects.

Restoring the gas tax to its 1990 purchasing power would require an increase of 14.4 cents a gallon, which would cost the average driver an extra $6.20 a month, according to the report. Restoring the tax to the purchasing power it had in 2000 would add 7.5 cents a gallon and cost the average driver $3.22 a month.

Read the full report here.

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