Massachusetts Voters May Repeal Automatic Gas Tax Indexing

It's been exactly a year since the state approved a 3-cent increase in the gas tax with hard fought legislation that ties future increases to inflation. However, the automatic indexing of the gas tax may be undone by voters on November 4.

2 minute read

July 31, 2014, 9:00 AM PDT

By Irvin Dawid


Many transportation policy experts advise that the federal and state gas taxes continually be adjusted for inflation, and many states, such as Kentucky, do just that. Modest increases can then bypass nasty legislative fights that make raising these taxes extremely difficult. Witness federal fuels taxes, stuck at 1993 levels, that explain why the Highway Trust Fund is projected to become insolvent late next month.

It's been a year since Massachusetts increased its gas tax (on July 30, 2013), the first time in over two decades. "The state's gas tax rose by 3 cents a gallon to 26.5 cents a gallon, including a 2.5 cent a gallon surcharge for cleaning underground storage tanks," wrote Dan Ring of Mass. Live last year.

The modest increase resulted from hard-fought legislation, vetoed by Gov. Deval Patrick for being too modest, but overridden by the legislature. It also tied future gas tax increases to inflation. On November 4, voters will decide whether to repeal those automatic increases set to begin next year as one of four ballot issues that result from citizen initiatives.

"Despite opposition by the group Tank the Gas Tax, which successfully gathered enough signatures to trigger a referendum to repeal the tax increase [sic], the 2013 measure is a sensible solution that stabilizes state gas tax revenues for future years," writes Tax Foundation policy intern Tyler Dennis.

While Question 1 does not repeal the 3.5-cent gas tax increase, it sets the framework for possibly having to wait another two decades for the legislature to increase the gas tax again should the initiative pass.

Even if voters reject Question 1, the citizen initiative illustrates one reason why many critics have called the gas tax unsustainable. Along with increasing fuel efficiency that result in less fuel used per vehicle, new vehicle technology that eliminates traditional taxable fuels, and demographic changes resulting in less driving, the political hurdles in raising the gas tax have many analysts calling for alternative revenue mechanisms such as mileage-based user fees.

For a full chronology of the gas tax repeal initiative, and how it relates to other tax increases repealed by the legislature, see Mass Live's Gas Tax article listing.

Tuesday, July 22, 2014 in Tax Foundation

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