Tax reform bill jacks gas prices 35% & siphons transportation taxes away from roads
Salt Lake City, Utah, Jan. 8, 2020—The pain you feel at the pump is going to get more severe unless voters stop a Utah tax reform bill that increases gas taxes by 35%. A nonpartisan group is working to collect enough signatures by January 21 to let voters decide whether or not the tax hike is “fuelish.”
Utah legislators passed S.B. 2001, a tax reform bill that raises taxes for fuel, groceries and services. Utah motorists already pay 16.5% or about 49.5 cents per gallon in gas taxes, the bill will also add a 4.85% sales tax—raising gasoline prices by another 11 cents per gallon.
“You may want to look twice before you cross the road because lawmakers want to tax your fuel two times before you travel there,” says Fred C. Cox, referendum organizer and former state legislator.
Gas pain The U.S Bureau of Labor Statistics determined the average married couple with children spends 17.1% of their income on transportation. The U.S. Energy Information Administration found each Utahn spends $983 each year on gas, or nearly $3,932 for a family of four. The new gas tax will cost those families an additional $190 each year.
Financial experts say higher gas prices can hurt the economy by increasing prices for goods, reducing consumer spending and lowering sales and slowing manufacturing economy.
“Fuel taxes have a pyramiding impact on businesses, municipalities and individual purchasers because they multiply price increases many times,” says Krista Palmer, Utah Tax Reform Coalition, executive director.
The price hike could specifically hurt Utah businesses and discourage other companies from moving to the state.
“Whenever taxes go up, retail profits go down,” said John Hill, executive director of the Utah Petroleum Marketers & Retailers Association.
Poor pay more Analysts also found that families with lower incomes pay a larger proportion of their earnings for gas. For example, a low-income commuter spends 8.6% of their wages on gas compared to 2.1% of the income of higher wage earners. The Brookings Institute says the poor get hit twice by higher gas prices, first by draining household budgets and a second time by slowing the economic recovery.
Constitutional Problems Even though the Utah Constitution requires all transportation-related sales taxes go towards roads. This bill replaces that funding with highway user fees and a road usage charge program.
“Moving transportation-related sales taxes is a shell game that hurts consumers and violates the intent of the Utah Constitution,” adds Cox.
People have the power The legislature requires referendum backers to gather 115,869 signatures, divided proportionally among at least 15 of Utah’s 29 counties, by January 21. More than 11,000 voters have signed the petition as of January 7, nearly quadruple the total from four days earlier. Registered voters can go to www.utah2019tax.com to get the latest times, dates and locations of petition signing events.