Typical drivers would pay $248 more under proposed transportation tax increase
A typical Washingtonian driving a used car would pay nearly $250 more in taxes and fees if a new transportation tax package is enacted in Olympia, a new analysis of the plan shows. Approximately half of tax revenue raised would go to funding new and existing highway projects. Only 11% is allocated to maintenance. Voters have clearly sent a message to Olympia regarding tax increases, and policymakers would be wise to focus on the needs of drivers when proposing another.
The total funding package would impose a 10-cent gas tax hike over three years (5/3/2), a 27% increase in the current state tax, higher yearly car tab fees, a new tax on trucks, a higher car registration fee, and a tax on changing a car’s ownership. In all, people would pay $5.2 billion in new taxes and fees over the first 12 years, in addition to the current financial burden lawmakers impose on citizens.
On top of all that, the tax package would provide for the legislature to give taxing power to the Secretary of Transportation. Under the bill, the Secretary could, without action by the legislature, increase the gas tax by as much as an additional three cents a gallon, or a further 8% increase.
The bill also allows local officials to increase local taxes and fees with a public vote. The King County Executive wants to impose a car-value tax of up to 1.5% of an automobile’s value every year. When the state charged a similar tax in the past, tax collectors used inflated values to collect more from car owners. Tax revenue generated by the value tax would be split 60/40 between transit and local roads.
Community Transit in Snohomish County would be allowed to increase sales taxes up to .3% with a public vote. Included in the package is a provision that allows for the creation of a sub-district within a district. For example, in Pierce County, where voters rejected sales tax increases for transit twice, officials would create a sub-district and increase sales taxes to their .9% maximum with a vote of that sub-district. Transportation benefit districts (TBDs) would double their fee to $40.
For example, below is the current and proposed annual car tab renewal and tax burden of a $10,000 passenger car registered in Kirkland, Wash. (assuming public vote passes on MVET car-value tax):
*Assumes FHWA average of 13,476 miles driven per year & the 2007 NHTSA 22.2 MPG model average = 607 gallons purchased/year
In recent years, billions of transportation dollars have been devoted to transit, serving only 3% of daily trips statewide. In fact, the 31 local transit agencies bring in more sales tax revenue than the entire state receives in gas tax revenue. Even though transit is not underfunded, the House proposal includes a $250 million direct operating subsidy to transit.
11% of the transportation tax revenue is allocated toward maintenance; however WSDOT’s primary focus is not addressing road and bridge maintenance, concentrating on stormwater maintenance instead.
As the public’s tax capacity wanes, lawmakers should propose transportation packages that benefit drivers, not transit. Drivers’ needs aren’t currently being met as Washington’s streets and highways have $50 billion in backlogged maintenance. Reducing congestion, maintaining bridges and highways, and fixing chokepoints should be the primary focus of state and local lawmakers when proposing a tax increase on drivers.