Time to wean Wisconsin off the gas tax
As fleet-wide fuel efficiency increases, Wisconsin must work to wean itself of over reliance on the per gallon fuel tax and look at other ways to pay for road system maintenance and upgrades.
Wisconsin imposes a 30.9 cent tax on every gallon of gasoline sold in the state. This money is the primary source of revenue to pay for road projects at the state level. In addition, portions of the gas tax go to other transportation projects including development of ATV and snowmobile trails.
In addition to the gas tax, state lawmakers are placing an increased burden on vehicle owners through annual registration fees. A handful of cities and counties, including Chippewa County, impose additional wheel taxes on vehicles registered there. The registration fees are viewed by many as being punitive in nature as owners of fully electric vehicles are being charged more. While the ostensible goal is to offset the loss in fuel tax revenues, this amounts to an ongoing effort by state lawmakers to disincentivize people from purchasing electric vehicles.
According to the Wisconsin Department of Transportation, a typical Wisconsin driver can expect to pay $342 per year between fuel taxes and registration fees, with $247 of that being fuel taxes. By comparison, a typical Minnesota driver will pay $809 per year while a Michigan driver will pay $475 per year in fees and fuel taxes.
The gap between Wisconsin and neighboring states is only expected to grow as vehicle values rise and vehicles become more fuel efficient.
Regardless of what a vehicle runs on, there is an ongoing cost to maintain the state’s road system.
While modern fully-automated toll roads would provide an excellent solution for securing funds to maintain the state’s biggest highways, politically they are a non-starter in the state because of long-standing prejudice against them.
A more practical and easy to implement method would be to replace the gas tax with a fractional increase in the state sales tax.
According to the nonpartisan Tax Foundation, the average Wisconsin resident pays about $1,000 a year in sales taxes, amounting to about 1.88% of the average taxpayer’s income.
One of the challenges of Wisconsin’s gas tax is that it takes an act of the legislature to make inflationary adjustments. Meanwhile, sales tax is constantly changing based on the price of goods and services. Considering virtually all goods and services had to travel on Wisconsin’s roads in order to get to consumers, it makes the most sense to tie road maintenance to a statutorily earmarked increase in sales tax.
Wisconsin should work toward eliminating the fuel tax and, in the process, reduce the fuel pump costs. The state can recover the lost revenue through a sales tax increase. A few pennies more on the candy bar in the convenience store is a small price to pay for a sizable drop at the pump and long-term funding stability that keeps match with inflation.
