Why is raising taxes always the answer to our problems?

On Tuesday, the Lt. Governor held a news conference at the intersection of Interstates 35W and 494. The purpose? To highlight rush hour congestion at what was recently described as the “17th most congested intersection” in the U.S.

Why is the Dayton Administration interested in highlighting terrible traffic congestion? It’s all part of their public relations campaign to get Minnesotans to ante up $6 billion in new taxes to pay for 600 road and bridge repair projects. The taxes would come in the form of a 6.5 percent gross receipts tax on gasoline at the wholesale level. At the current pump price of $2.29, drivers would pay an extra 16 cents per gallon. The wholesale tax per gallon would rise as gas prices rise, meaning that when gasoline is once again $4 per gallon, the wholesale tax would increase to 22 cents. As such, Minnesota taxpayers will lose while our state government will continue to grow in size and scope.

Governor Dayton conceded when discussing his plan to repair roads and bridges that “no one wants to pay more taxes. But conditions and congestion will keep getting worse until we do something about it.” And that’s where the $6 billion in new fuel taxes figures in: the same Minnesota bureaucrats that helped create this problem with unaccountable spending on transportation now want taxpayers to pay even more at the pump to fix the gridlock.

The good news is that Minnesotans aren’t buying into the need to pay more taxes to fix our roads. In a KSTP/Survey USA poll released late yesterday, 75% of those surveyed favored using part of the current budget surplus to increase transportation funding aimed at fixing roads and bridges. A majority of those polled (51%) opposed Governor Dayton’s plan that would increase the sales tax on gasoline, increase license tab fees and increase the metro sales tax.

If you think this gas tax debate sounds like “déjà vu all over again”, you’re correct: in 2008 the Legislature increased gas taxes by 8.5 cents per gallon. That massive tax increase was supposed to provide enough cash to keep MNDoT fixing roads and bridges for a decade. Now, a few short years later, the Governor and his allies are back seeking a new and whopping $6 billion tax increase.

Why oppose this tax increase? The most troubling aspect is the lack of transparency of a “gross receipts tax”. This is essentially a “hidden” tax on gasoline at the wholesale level. Yet each of us will pay more if this tax is increased since taxes like this are often passed along to consumers with not only higher taxes at the gas pump but they also increase the cost of groceries and other household necessities since the cost of shipping food to market will also increase.

Asking politicians to vote on a massive increase in the gasoline excise tax should always be tough. Making getting to work, school or daycare more expensive is something that should cause them to pause and consider the law’s effect on each family in their legislative district. But the transportation planners at MNDoT aren’t worried about the effect of higher taxes on consumers – they have their own agenda. That’s why the governor’s Transportation Plan includes an additional $75 million for “Safe Routes to Schools’ and bike/pedestrian infrastructure upgrades” and other assorted non-essential programs that don’t ease gridlock or fix our roads.

So when you hear politicians grandstanding saying we need to raise taxes to put an end to gridlock on the roads we drive every day, be sure to ask them what happened to the revenue raised by the 2008 gas tax increase and why gridlock on 35W and 494 has gotten worse. If more money was the solution to our problems, it seems like that gas tax increase would have done something to make commuting a little easier.

In 2013, the Legislature gave Minnesota counties the option of enacting a $10 wheelage tax on motor vehicles. The Association of Minnesota Counties reports that over half have opted to impose the tax, resulting in an additional $33.1 million dollars annually for road and bridge repair. In addition, the Legislature gave counties the power to impose a local option sales tax for transit and transportation. Combined, local governments and MNDoT spend close to $5 billion each year on roads, bridges, bus and rail transit, airports and other transportation-related projects. This amounts to spending nearly $1,000 per resident of the state on transportation. When I’m stuck in traffic or drive into a jarring pothole, I often wonder where all of this money goes. Minnesotans deserve answers to these hard questions before politicians reach into our pockets for even more.

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