Rochester Today: Governor’s Gas Tax Plan is Flawed

Governor Mark Dayton's Transportation proposal, specifically his call for a tax on wholesale gasoline purchases, became a hot topic during Tuesday's Rochester Today show with Tom Ostrom and Andy Brownell on KROC-AM.

The governor wants to add a 6.5-percent tax on gasoline purchases, along with a $10 increase in vehicle license registration fees, and a sales tax increase in the Twin Cities to fund about six billion dollars in transportation infrastructure improvements over 10 years. While there wasn't much disagreement about the need for additional money for highway and bridge projects, there were objections voiced about the proposed tax on wholesale gasoline purchases.

Prompted by a call from a listener who pointed out the revenues collected by the tax would fluctuate greatly because it would be tied to a highly volatile energy prices, Andy expanded on the point by also noting that it would be a highly regressive tax. Because the amount paid by the consumer is based on the percentage of the price, the tax would grow along with the price of gasoline. While no one would be pleased, the double-whammy of higher gasoline prices along with higher taxes would hit low-income Minnesotans the hardest. Adding insult to injury, low-income workers are more likely to drive less efficient vehicles, which would likely cause them to fuel up more often and feel an even bigger pinch from the governor's proposed tax.

Ironically, the funding crunch for road and bridge projects is partially due to the government's efforts to push Americans to drive more efficient vehicles.