With Indiana’s average gas prices hitting an all-time high this week, calls to suspend the state fuel tax are getting louder. While that action will reduce the price at the pump, it ignores the consequences of doing so. Suspending the fuel tax ultimately will cost us all much more.
Let’s look closer at the facts surrounding the fuel tax that is used to maintain state and local streets and roads.
Prior to 2017, fuel taxes in Indiana had not been increased in nearly 15 years and the roads and bridges were falling apart. The average Hoosier drives around 13,500 miles annually, and the average vehicle gets around 25 miles per gallon. That means the average Hoosier pays less than $175 per year in gasoline taxes.
The federal government does not maintain the interstate highways; the state does. But about 90% of the federal fuel tax collected is returned to Indiana via matching funds to help with road and bridge projects.
The big concern is if Indiana suspends its fuel tax, there is nothing to match from the federal government. So no money will be collected and available for the state’s roadways.
And road maintenance in Indiana is paid for exclusively with state and federal fuel taxes.
With a gas tax suspension, state and local communities would forgo almost $500 million in state and local road funding revenue each quarter, not to mention the federal matching dollars that top $1.2 billion per year. This translates into 500 Indiana lane miles not repaired or surface replaced. It also would impact the workforce with more than 7,000 jobs lost.
The reality is those impacts are far greater than the price at the pump.
At the root of the fuel issue is our nation’s reluctance to increase petroleum production and instead rely on volatile nations. That’s what really needs to be examined and where action needs to happen.
That message is one we will keep conveying to our Congressional delegation and state lawmakers and officials.
Resource: Greg Ellis at (317) 264-6881 or email: gellis@indianachamber.com
