General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsImpact of low gas prices
I am in a state of bewilderment and somewhat bemused happiness to see my local gas prices go from $3.78 last year to $2.10 the last time I checked. But, using the 1/2 glass empty/full analogy, I began to wonder about the impact on the economy-especially in tax collection. Kentucky is already planning on a significant part of its revenues being impacted:
"The main user fee is the tax on motor fuels, which is paid at the pump and has two components: a variable excise tax 21.2 cents beginning Jan. 1 and a fixed user fee of 5 cents a gallon for gasoline and 2 cents a gallon for diesel and other "special fuels."
There also is a state fee that is paid at the pump 1.4 cents a gallon for cleanup of old underground fuel storage tanks.
And there is a federal tax of 18.4 cents a gallon per gasoline and 24.4 cents per gallon of diesel. The federal tax is not indexed for inflation and hasn't changed since 1993.
Local governments also will feel a pinch from the lower tax because 48 percent of it is returned to cities and counties in the form of revenue sharing for local streets and roads.
Read more here: http://www.kentucky.com/2014/11/19/3547284/kentuckys-gas-tax-dropping-43.html#storylink=cpy
Those states with taxes that are dependent on a variable excise tax as a percentage of pump prices must be hurting and not enjoying the fall in prices. Somehow at some time this has got to impact what gas taxes are supposed to be spent on - road building and repair.
yeoman6987
(14,449 posts)Seems the only break we are getting lately.
packman
(16,296 posts)Just that I wonder when the other shoe is going to drop and on whose toes. It's like the good times you had experiencing that first cigar, first car smell, and the joy of getting a little kitten - then reality set in. You turned green and puked , the kids tracked mud in the car, and the little ball of fur is hacking up over your keyboard.
I still remember 30cent a gallon gas - and life was pretty good back then. Of course, Mom and Dad were paying all the bills.
Fred Sanders
(23,946 posts)Prices went down 40%, raise the taxes 40% from current per gallon rates to make it up, proportionality it will be minor.
Throd
(7,208 posts)Some people have to choose between gas and other luxuries like food and rent.
Fred Sanders
(23,946 posts)an either/ or decision.
Throd
(7,208 posts)Bandit
(21,475 posts)If you believe in Progressive Taxation like EVERY Democrat should then you would know the answer and it isn't adding more regressive taxes.
Fred Sanders
(23,946 posts)are more than made up for by the oil component part of the price as of late.
How else do you propose the roads be fixed or built if the money from gas tax runs dry?
Tax the rich, all for that...when is that happening?
The Velveteen Ocelot
(115,748 posts)lower gas prices also means people who have low-wage jobs and need a car to get around will have an easier time of it. Even an extra $30 or so a month can mean a lot if your finances are tight. Also, the transportation industry will benefit from lower fuel prices; high gas prices are especially tough on independent truckers. The biggest part of an airline's budget in recent years has been fuel - and they make up the loss by cutting labor. If it costs less to ship goods by air, rail or truck, that's reflected in consumer prices. The down side might be less immediate incentive to invest in alternate energy sources, but we all know these low prices can't last forever. And I doubt a lot of people are going to run out and buy Hummers just on account of lower gas prices.
rock
(13,218 posts)And the government will collect on sales tax as well as whatever boost to the economy occurs. Somewhat of a wash.