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Vermont Legislature
Follow VPR's statehouse coverage, featuring Pete Hirschfeld and Bob Kinzel in our Statehouse Bureau in Montpelier.

McQuiston: The Gas Tax

Because of our geography, modest level of public transportation and our independent nature, Vermonters love to drive – need to drive.Local commercials are so full of auto ads that many of their pitchmen have become minor Vermont celebrities.

But driving is expensive - especially the gasoline. And as vital as the auto industry is to Vermont, from selling and servicing cars to getting us to work, gas is a waste of money, a necessary waste perhaps, but it’s like burning dollar bills in your engine for all the good it does the economy - because for all the gas money poured into cars and trucks, it’s a sector of the economy that employs a scant few.

When gas prices rise, money is simply removed from the wallets of consumers. But right now, despite a recent increase, gasoline prices are well below the 2012 peak when they were near four dollars a gallon. The average in Vermont today is about two-fifty.

It’s estimated that this adds up to an average savings of 2,500 dollars per household per year - or a whopping 600 million for the Vermont economy. Call it a pay raise or tax cut, it means consumers have a lot more money to spend on a lot more things for a whole lot more economic benefit.

But… between lower gas prices and more fuel efficient vehicles, the gasoline tax is also down. Vermont’s long winters make for many potholes. Without gas taxes, roads will get worse - and bridges too. The gas tax not only pays for road repair, it enables the state to access federal transportation funds. The state only pays about 20 percent for highway repairs. The feds pick up the rest.

So the Legislature will have to consider raising the gas tax to pay for road repair - and they probably will - which is disappointing because we were counting on the drop in gas prices to help us shake off the remnants of the recession.

There’s also talk of the gasoline tax being used to pay for Lake Champlain cleanup, which the EPA is forcing the state to finally take seriously.

But it’s not logical for that purpose and would rob the transportation fund even more.

In this time of budget shortfalls, the gas tax needs to be raised for the sake of our roads. It’s not ideal for the economy, but we need that federal match. If we don’t get it, it’ll be like putting a match to millions of dollars.

Tim McQuiston is editor of Vermont Business Magazine.
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