Putting the Brakes on the Gas Tax

Posted on August 23, 2006 | Author: Noah Clarke
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Every time I fill up my Toyota Camry, I pay more than $3.00 in state gas tax. Through this tax, the state will collect over $525 million in 2007 to finance highway construction and maintenance. This year, the state will kick in an additional $245 million from the General Fund to pay for accelerated construction. Highways, in short, are not "free"ways. 

Government didn't always impose taxes to pay for highways. In the nineteenth century, over 2,000 private companies financed, built, and operated toll roads. Phoenix was no different. The picture below is of the 1880 toll gate at Central and McDowell avenues, operated by the Central Avenue Improvement Association.

Now, a century after getting in, some governments want to get out of the highway business. They are leasing sections of road to private operators who will finance upkeep and expansion through tolls. For example, the City of Chicago signed a $1.8 billion 99-year lease of its eight mile long Skyway. Indiana's Governor also arranged a 75-year, $3.85 billion lease of the state's toll road.

Arizona should investigate contracting with private companies. Doing so could reduce the state's financial liability for highway maintenance and construction. If the state has reduced costs, it would be the perfect opportunity to reduce the gas tax and lower the overall tax burden on Arizonans.

Noah Clarke is an economist with the Goldwater Institute Center for Economic Prosperity.

Key Links:

-Transportation Research Board: "The Fuel Tax and Alternatives for Transportation Funding"
-Reason Foundation: "Annual Privatization Report 2006: Transforming Government Though Privatization"
- Washington Post: "Strapped States Try New Route, Lease Toll Roads to Foreign Firms"
-NPR : Governments Sell Roads to Raise Cash

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