Most drivers realize gas prices peak and valley based upon seasons and demand. The recent spike in price from $3 to $3.55 per gallon in one month was extreme.
Spikes could be less severe if the state gas tax ratcheted down during peak periods and ratcheted back up during valleys. Former Gov. Tim Pawlenty suggested just such an idea when he was in office, and its merits remain today.
During peaks, small businesses, farmers and lower income drivers have no choice but to find the extra money for gas. That often comes at the expense of other bills. And, tourism-dependent regions like the lakes area can suffer.
Lawmakers and Gov. Mark Dayton seem to want to reform taxes. Both sides of the aisle say they want to make taxes more fair and keep the state’s income stream more stable.
We believe a sliding gas tax could be part of the solution. By lowering the tax during peaks such as summer, Minnesotans might be more willing to drive up north and stimulate the state’s tourism economy.
Conversely, if the tax increased when gas prices were lower in the winter, drivers could more easily pay the tax. The state could theoretically collect enough to make up for the peaks, and maybe even get ahead. Whatever surplus is collected could be dedicated to a road and bridge repair account.
All states and the federal government add a gas tax. It ranges from a low of 8 cents in Alaska to a high of 49 cents in New York. Area states tax at the following amounts, according to the American Petroleum Institute:
Iowa 22 cents
Minnesota 28.1 cents
North Dakota 23 cents
South Dakota 24 cents
Wisconsin 32.9 cents
National avg. 31.1 cents
Federal tax 18.4 cents
Adding the Minnesota tax of 28.1 cents to the federal tax of 18.4 cents results in a total gas tax of 46.5 cents in the land of 10,000 lakes. That is 4 cents less than the national average of 49.5 cents.
When gas prices spike 50 cents, Minnesota’s gas tax could drop in half from 28 cents to 14 cents. When gas prices fall 50 cents, the tax could rise from 28 to 50 cents, allowing the state to cover the drop in tax. Any surplus could go into a road and bridge account.
Opponents of this idea might say it would be tricky for the state to set the tax each time prices go up or down. That’s a valid point. However, if gas stations are sophisticated enough to change prices each day, the state should be able to do so.
Besides, if the current DFL governor and DFL controlled Legislature could adopt an idea from a former Republican governor, lawmakers from both sides might pull into the station to support it.
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