Diesel fuel tax would increase 70%
As you’ve read here many times, the Knoxville News Sentinel is utterly predictable. The News Sentinel has never seen a new tax or an existing tax increase that they didn’t like. So, the Sentinel surprised no one when it proclaimed Governor Bill Haslam’s proposal to increase the gasoline tax was “reasonable” and “fair.” Another Gannett newspaper, the Nashville Tennessean, hailed the gas tax hike as “bold” and “responsible.” I beg to differ. While it is certainly “bold,” I would also call it “huge.”
The gasoline tax is supposed to be a “dedicated” tax, meaning it can be spent only on roads, infrastructure, etc., yet the Tennessee General Assembly in past years found ways to raid it when they needed money for other things. There’s not a reason in the world to believe that won’t happen again should the desire for more money become pressing. As we all know, there are numerous groups asking the legislature for more and more money every year. If all of this was not bad enough, the governor has added an amendment to the bill to throw the doors wide open to allow city and county governments to raise the sales tax, the property tax and virtually every tax known to mankind through local referendums. As you can readily see, the bill is a veritable cornucopia of tax hikes.
Furthermore, while the governor describes the tax increase in term of pennies, it is a 33% increase in the existing gas tax. The proposed tax increase for diesel fuel is more than 70%. Unfortunately, that’s not the worst aspect of the proposed gas tax hikes. The governor, and this is certainly “bold,” proposes to link the tax hike to the Consumer Price Index, which means it could go up every year. Governor Haslam and his gas tax increase supporters will tell you that linking the tax hike to the Consumer Price Index merely allows the tax to “keep up with inflation,” as the Sentinel did, but what it really means is an automatic increase as inflation goes up. Basically, the tax will rise along with the price of milk, bread, food, and household goods. What may NOT go up is your paycheck. How many working folks receive pay raises as inflation rises? None that I know of. When inflation goes up, our dollars buy less, so the governor proposes to hook a tax to an index that is surely to rise. Wow! Theoretically, the index could go down, but that’s about as likely as Hillary Clinton turning down a speaking fee.
This year Tennessee is projected to have a surplus of about $2 billion and President Donald Trump is proposing to spend $1 trillion on infrastructure across the country. State Representative Jason Zachary has already introduced an alternative bill taking some of the surplus to begin work on some pending road projects. I understand there are a few other legislators sponsoring similar alternative bills in Nashville. It seems prudent to wait and see what, if anything, the President and Congress might do and what Tennessee’s share might amount to before attaching a higher tax to a kite and seeing how high it can fly.
The argument that we should increase fuel taxes because they hadn’t been raised since 1989 is odd to me. In my opinion, simply because a tax hasn’t been raised in a while, doesn’t that mean it’s time to raise it again. At the same time, the governor proposes some very modest tax cuts, including a reduction in the sales tax on food from 5% to 4.5%. Do you suppose you will feel that cut to the same extent you feel the increase in the gasoline tax? Nor do any of us believe that gasoline will remain at its current relatively low price. It never does and many of us can easily recall when it was approaching $5.00 per gallon. Furthermore, the 70% tax increase on diesel fuel will increase the cost of transporting goods, which in turn always increases the cost of those same goods to consumers.
Indexing a tax is a truly terrible idea; imagine if your mortgage payment or rent was indexed, how long do you suppose you’d have a place to live?
If you think the governor’s gas tax hike is a bad idea, you can find and contact your legislators at capitol.tn.gov.