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Myth versus Fact on the Gas Tax Increase

Economic & Fiscal Policy, Gas Tax/Infrastructure

by Marc Kilmer

SPECIAL REPORT

MARCH 22, 2013 Bookmark and Share

Myth versus Fact on the Gas Tax Increase

 

MYTH:  The money raised through the higher gas tax would only be used for transportation projects.

FACT: In recent years, governors and legislators have diverted $1 billion from the Transportation Trust Fund to pay for other projects. Absent a constitutional ban on doing so, ongoing deficits make it likely legislators will be tempted to take more money from the Transportation Trust Fund in the future.

MYTH:  A higher gas tax will improve the state economy by creating more jobs.

FACT: By 2018, the higher gas tax would remove over $600 million per year from the Maryland economy. As such, whatever jobs would be created through higher spending would be offset by the $600 lost in other spending.

Also, higher gas taxes disproportionately hurt the poor and those with lower incomes as they spend a higher percentage of their income on transportation than other people. The governor’s proposal would  hurt Marylanders with incomes under $40,000 far more than those with incomes over $100,000.

MYTH:  Money from the Transportation Trust Fund would only be used to reduce road congestion and increase mobility on roads.

FACT: Over the past five years, roughly 50 percent of combined highway and transit spending has been focused on transit. In 2009, 48 percent of transportation funding went to transit – 20 times the statewide transit share of3 percent of passenger movement.

The current method of allocating transportation funding fails to serve Marylanders’ needs. The state should adopt a performance-based transportation program that will be focused on reducing congestion. Until this happens, whatever money the state brings in through the gas tax will not be used as effectively as possible.

MYTH: Transit could be the easiest way to reach work for all commuters.

FACT: There is virtually no potential for transit to carry a material share of travel to the 80 or 90 percent of the jobs outside of core urban areas since the concentration of destinations needed to compete with cars exists nowhere else.

Current census data show that of the Marylanders who work outside the home, over 87% use private automobiles to commute. Transit is used by only a small portion of Marylanders currently and accounts for only 3% of all travel.

MYTH:  More people ride transit than ever before.

FACT: Even with a big increase in MARC train service and the addition of light rail in Baltimore, about the same share of Marylanders get to work by transit today as in 1980.

MYTH: Transit is convenient.

FACT: The average transit trip is much longer than one by car. In the Baltimore metropolitan area, the average one-way transit commute is 53 minutes, while the average car commute is 28 minutes.  In the Washington metropolitan area, the average one-way transit commute is 47 minutes, while the average car commute is 32 minutes.

Of note, the Brookings Institution found that, on average, fewer than 10 percent of jobs in Washington and Baltimore can be reached by transit within 45 minutes.

MYTH: This gas tax increase is needed to keep Maryland competitive with our neighbors.

FACT: The gas tax increase will lead to substantially higher gas tax rates than our neighboring states. If this proposal becomes law, the difference in per gallon state fuel tax between Maryland and Virginia could be approximately 33.2 cents per gallon by 2016. Currently, the Maryland and Washington, D.C., tax rate are the same. This is a huge incentive for Maryland’s many commuters to buy gas in these states, something that hurts Maryland businesses.

MYTH: This tax increase is good for all Marylanders

FACT: The tax increase is good for the small number of suburban Marylanders who use transit. For rural Marylanders, who tend to have lower incomes as well as drive longer distances, this gas tax will impose a much larger burden on them. And with Maryland’s skewed spending on transit versus roads, they will see fewer benefits from the projects funded with the new tax revenue. This transit-heavy approach to transportation funding also hurts the many urban and suburban Marylanders who do not use transit regularly.

Related Links

A New Transportation Plan For Maryland
Think tank: Gas tax not necessary