Eight states raise their gas tax
Md. gas tax goes up
Wenqian Zhu | 7/4/2013, 11:30 p.m.
NEW YORK (CNNMoney) Eight states increased their gas tax this week, according to a report from the Institute on Taxation and Economic Policy.
The largest boost was in Wyoming, which raised its gas tax by 10 cents a gallon, followed by Connecticut, California, Maryland, Kentucky, Nebraska, Georgia and North Carolina.
The increases went in to effect on July first.
"It's a marginal increase," said Ken Orski, publisher of the infrastructure industry publication Innovation NewsBriefs.
Meanwhile gas taxes in Virginia and Vermont went down.
"Some drivers in Maryland may fill up in Virginia as its gas tax went down. For other states, I don't think the increase is noticeable," Orski said.
Unlike state gas taxes, which have been fluctuating, the federal gas tax has remained unchanged at 18.4 cents per gallon since 1993, despite a 55% increase in the cost of road building over the last 20 years.
Therefore tax revenue keeps falling short and the federal government has to make massive cuts in infrastructure spending to fill in the gaps, said Carl Davis, senior analyst at The Institute on Taxation and Economic Policy.
State and federal gas taxes are mainly used for road building and other transportation infrastructure projects.
Raising the federal tax is politically unpopular since taxpayers may not see how their federal dollars are put to work. Meanwhile, state taxes are more prone to be raised because they're more tangible. "[Taxpayers] understand better where the money is going," Orski said.
Wyoming and Maryland's legislatures voted to increase their gas tax, while the other states' gas taxes are set to automatically go up every six to 12 months to keep pace with inflation. Currently 16 states automatically peg their gas tax to inflation.
"The increase is an indication that states have a heavier burden of investing in transportation since they don't have enough funding from the federal government," said Emil Frankel, a former transportation expert in the George W. Bush administration and now director of transportation policy at the Bipartisan Policy Center.
Davis said it's a tough political challenge.
"Gas tax increases pale in comparison to gas price volatility. People are more sensitive to gas price changes," he said.
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