Economist: It may be a good time to raise gas taxes

A Ball State University economist, in a new policy brief, said there may not be a better time for states to increase gas taxes to help pay for infrastructure improvements.

Michael Hicks, author of Gasoline Taxes: Some History and Analysis Introduction, said the cost of driving 100 miles is now half what it was in the 1930s, and he projects the cost of a five cent increase would have no appreciable impact on key measures of employment or gross domestic product in Indiana.

“If there is a long-term need to increase gasoline taxes to pay for infrastructure maintenance and construction, the current low prices, increasing fuel efficiency and long-term decline in real tax revenues suggest this is a good time to enact such an increase,” said Hicks, director of Ball State’s Center for Business and Economic Research.  “A final, but critical point, is that higher tax rates are not necessarily viewed negatively by businesses and residents. Higher taxes deployed to purchase more or better quality public services positively affect economic outcomes.”

Drivers in nine states saw an increase in gas taxes on Jan. 1.

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